RBI MONETARY POLICY

Commenting on the monetary policy, FICCI said that Reserve Bank has maintained status quo on the policyrates. While this is on expected lines, we do hope that continuous focus of the central bank on improving the transmission of the previous rate cuts into lower lending rates would yield effective results and that we will see a greater pass through going ahead.

The recently announced GDP numbers indicate that the economy has moved to a steady growth trajectory. Further, we expect the capacity utilization rates to improve as both rural and urban demand will note an uptick on back of good monsoons and the pay commission announcement respectively. As capacity utilization rates improve and fresh investment plans come on to the drawing board, it will be important to have a supportive monetary policy to sustain the momentum.

WPI INFLATION NUMBERS

Commenting on the inflation numbers, FICCI said that the latest numbers report prices edging up on the back of elevated food prices. Upward pressure in prices is noted in the case of fruits and vegetables and protein rich items. This clearly calls for a more proactive management from the supply side. Several steps have been taken by the government to augment supplies and improve distribution of such items. We hope that the situation would be managed well and that inflation will remain within RBI’s indicative trajectory.