RBI MONETARY POLICY UPDATE – August 2016

RBI governor Raghu ram rajan announced the third bi-monthly monetary policy for this fiscal year 2016-17 today. The main highlights are:

1. The Repo rate is unchanged at 6.50 per cent. Cash reserve ratio (CRR) of scheduled banks is unchanged at 4.0 per cent.

Repo rate is the rate at which RBI lends money to banks.This may lead tono change in interest rates on all loans by banks.

 

2. Retail inflation measured by the consumer price index (CPI) rose to a 22-month high in June mainly driven by food, with vegetable inflation higher.

3. Liquidity conditions(i.e.: supply of money) were easier during June and July due to increased spending by the Government

4. Slow growth in the capital goods sector is indicative of weak investment demand.

5. The services sector is seeing growth for the thirteenth successive month in July

6. Export growth was positive in June after eighteen months.

7. The recent increase in food prices has pushed up inflation expectation over the rest of the year. Also prices of pulses and cereals are rising and services inflation remains high

8. There is anupside risk to the retail inflation as measured by CPI (consumer price index) forecast of 5 per cent by March 2017. This means thatretail inflation may remain higher than the forecast of 5 per cent.

Higher inflation leads to higher cost of living expenses.

9. By early August,more than 80 per cent of the country received normal to excess rainfall.

10. GDP growth projection is likely to be @ 7.6% for FY16-17

– It is expected to have a normal to strong monsoon after two years of consecutive deficient monsoons.

– Weak domestic private investment, stalled projects, excess capacity in the industry and lower exports outlook are the negative factors to carefully watch.

11.  Growth prospects and CPI inflation data will be considered, while deciding the future interest rate movements.                                                   

prashant.mehta@acm.co.in

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

No votes yet.
Please wait...

Leave a Reply

eleven − 7 =

"Prevent unauthorized transactions in your trading and demat account- Update your mobile numbers/email IDs with your Stock Broker and Depository Participant. Receive information of your transactions directly from Exchange on your mobile/email at the end of day. Receive alerts on your Registered Mobile for all debits and other important transactions in your demat account directly from CDSL on the same day call us on 02228584545 Email : customerservice@acm.co.in

Copyrights @ 2013 Asit C Mehta Investment Interrmediates Ltd.(ISO 9001:2015 certified company)