HIGHER FOOD PRICES MAY NOT ALLOW NEW
RBI GOVERNOR URJIT PATEL TO CUT RATES IMMEDIATELY
Urjit Patel who has assumed charge as the 24th
governor of the Reserve Bank of India with effect from 4 september,2016 may not
be able to cut policy rates immediately as food prices along with the recent
rise in fuel prices will create doubts over inflation movement.
Market Participants will keenly follow how the architect of
inflation targeting balances the 2 key aspects of growth dynamics-inflation
management and better credit delivery.He will deliver his first monetary policy
on October 4 but given the recent rise in food and vegetable prices,chances of
an immediate rate cut from Patel may be remote.
RBI has projected inflation at 5% by March 2017.
“The chances of a rate cut on October 4 policy looks limited
given the recent movement of food prices and near term outlook of inflation”
Indian Ratings and Research chief economist Devendra Kumar Pant
told ET.
The new governor succeeded Raghuram Rajan ,whose 3 year term
ended on September 4.
Patel, a Ph.D in
economics from Yale University,he needs to ensure that the sluggish global
environment does not impact India.With Patel as new governor,every stakeholder
in the market expects continuity in the monetary policy approach.
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