The Reserve Bank of India (RBI), as expected, has interest rates unchanged in its mid-term review of monetary policy today, 16 December 2010. It was decided to keep interest rates at 6.25% and the repo rate by 5.25% under its liquidity adjustment mechanism (LAF). He kept the cash reserve ratio (CRR) of 6% of net demand and time liabilities (NDTL) expects banks. In addition, the central bank announced a reduction in statutory liquidity ratio (SLR) of banks scheduledcommercial (BCL) 25% of their NDTL to 24% with effect from 18 December 2010.
We have put together in myiris main observations and comments on RBI credit policy on various industry experts as follows:
Jay Shankar, chief economist - Executive Vice President, Capital Markets religare:
`` The RBI, as expected policy rate unchanged. Liquidity management is the theme of the Political Declaration and Programme of Action has been taken. The cup and SLR can AMO demanding as to inject liquidity into the system, without the employment multiplier to be considered. The statement continued his hard-line position on inflation. We believe that the increased risk of inflation in recent weeks. However, we are maintaining our estimate of inflation for FY11-end (end of period) and the average remains at 6% and 8.4% with a positive bias. We believe that a further increase of 25 basis points of rate arrears in FY11. Today is "policy is likely to be a break, best how we different rate believe a 25 basis point policy (Pass and reverse repo) is still looming in the year in progress. With today` s rise in food prices, inflation for a week until the end of December four years 9.46% to 8.69% in the past week, in addition to higher gasoline prices earlier this week, and price increases expecteddiesel next week, the outlook for inflation remains a problem. Our estimates for FY11- End (end of period) and the average remains at 6% and 8.4%. ``
Dr. Arun Singh, a senior economist at Dun & Bradstreet Information Services India:
`` As expected, the central bank had maintained the status quo in relation to the interest of the general debate in the middle of the quarter. Other measures in the face of persistent liquidity pressures in recent weeks, the RBI has announced to the liquidity, such as reducing the SLR to 24% and the realization of the OMA GS for sale for a total of 480 million rupees. Despite the decline in liquidity in the SLR would improve individual bank to the banking system as a whole theeffectiveness this measure is likely to be small, as many banks hold more than the limit prescribed SLR. ``
Vijai Mantri, MD and CEO of Pramerica Asset Managers:
`` RBI has set on the structural liquidity shortage and SLR by 1% concentrated. It also shows the enormous impact that stays in touch with the new influx of foreigners. Repayment of bonds SLR along with parameter should lead to a gradual improvement in the liquidity of the system. Inflation remains a concern, but RBI can wait until March 2011 before any other measures. ``
Mahhendra Jajo, ED & CIO, Fixed Income, Manager, Pramerica:
`` RBI has addressed the structural deficit liquidity liquidity injection through primary SLR coupe and buy bonds. A multiplier effect will also reduce the liquidity shortage of other short-term. A gradual improvement in the liquidity of the system is now planned. The short-term interest rates to stabilize at current levels. Despite inflation concerns remain, it is unlikely that RBI raise interest rates further in our view, at least until March 2011. ``
Aneesh Srivastava, CIO - IDBI Confederation Life Insurance Partnership:
`` It was expected that there is no change in the repo rate and reverse-capture, was the only one to wait at least it would cut interest rates by 25 basis points in CRR in the light of the crisis of liquidity. 24% - but RBI has reduced the SLR requirement of 25%. If public spending does not rise, we hope that this liquidity crisis can then continue to RBI `s should be between 1% NDTL. ``
Rupesh Nagda - Chief Investment and products, Alchemy Capital Management:
`` We welcome the steps by the central bank in its policy review mid-term hit. Not to increase the types of measures, the reduction of 1% for SLR and Rs 480 billion injection of liquidity into the system by buying government bonds from banks has sought RBI, remedy to create liquidity tightened. We expect the short-term interest rates soon begin to ease. ``
Avinash Gupta, Vice President of Equity Research, Bonanza Portfolio
`` A review of credit policy, interest rates have changed. It was decided to inject liquidity into the system permanently reduce the need for SLR of 25% to 24%. RBI may buy shares worth Rs 480 billion. RBI said that you are not comfortable with the slow decline in inflation. This was the domestic demand and structural factors. Non-food inflation has also started looking up. Looking ahead RBI is that inflation would grasp at the end of March by 5.5% point out that before. The estimated inflation rate at year-end could be revised upward revision in January 2011th However, could the estimated GDP growth for FY11 from the current estimate may be revised from 8.5%. A higher inflation rate is expected 2011unless January is significantly reduced and simplified the inflation pressure significantly.
We have put together in myiris main observations and comments on RBI credit policy on various industry experts as follows:
Jay Shankar, chief economist - Executive Vice President, Capital Markets religare:
`` The RBI, as expected policy rate unchanged. Liquidity management is the theme of the Political Declaration and Programme of Action has been taken. The cup and SLR can AMO demanding as to inject liquidity into the system, without the employment multiplier to be considered. The statement continued his hard-line position on inflation. We believe that the increased risk of inflation in recent weeks. However, we are maintaining our estimate of inflation for FY11-end (end of period) and the average remains at 6% and 8.4% with a positive bias. We believe that a further increase of 25 basis points of rate arrears in FY11. Today is "policy is likely to be a break, best how we different rate believe a 25 basis point policy (Pass and reverse repo) is still looming in the year in progress. With today` s rise in food prices, inflation for a week until the end of December four years 9.46% to 8.69% in the past week, in addition to higher gasoline prices earlier this week, and price increases expecteddiesel next week, the outlook for inflation remains a problem. Our estimates for FY11- End (end of period) and the average remains at 6% and 8.4%. ``
Dr. Arun Singh, a senior economist at Dun & Bradstreet Information Services India:
`` As expected, the central bank had maintained the status quo in relation to the interest of the general debate in the middle of the quarter. Other measures in the face of persistent liquidity pressures in recent weeks, the RBI has announced to the liquidity, such as reducing the SLR to 24% and the realization of the OMA GS for sale for a total of 480 million rupees. Despite the decline in liquidity in the SLR would improve individual bank to the banking system as a whole theeffectiveness this measure is likely to be small, as many banks hold more than the limit prescribed SLR. ``
Vijai Mantri, MD and CEO of Pramerica Asset Managers:
`` RBI has set on the structural liquidity shortage and SLR by 1% concentrated. It also shows the enormous impact that stays in touch with the new influx of foreigners. Repayment of bonds SLR along with parameter should lead to a gradual improvement in the liquidity of the system. Inflation remains a concern, but RBI can wait until March 2011 before any other measures. ``
Mahhendra Jajo, ED & CIO, Fixed Income, Manager, Pramerica:
`` RBI has addressed the structural deficit liquidity liquidity injection through primary SLR coupe and buy bonds. A multiplier effect will also reduce the liquidity shortage of other short-term. A gradual improvement in the liquidity of the system is now planned. The short-term interest rates to stabilize at current levels. Despite inflation concerns remain, it is unlikely that RBI raise interest rates further in our view, at least until March 2011. ``
Aneesh Srivastava, CIO - IDBI Confederation Life Insurance Partnership:
`` It was expected that there is no change in the repo rate and reverse-capture, was the only one to wait at least it would cut interest rates by 25 basis points in CRR in the light of the crisis of liquidity. 24% - but RBI has reduced the SLR requirement of 25%. If public spending does not rise, we hope that this liquidity crisis can then continue to RBI `s should be between 1% NDTL. ``
Rupesh Nagda - Chief Investment and products, Alchemy Capital Management:
`` We welcome the steps by the central bank in its policy review mid-term hit. Not to increase the types of measures, the reduction of 1% for SLR and Rs 480 billion injection of liquidity into the system by buying government bonds from banks has sought RBI, remedy to create liquidity tightened. We expect the short-term interest rates soon begin to ease. ``
Avinash Gupta, Vice President of Equity Research, Bonanza Portfolio
`` A review of credit policy, interest rates have changed. It was decided to inject liquidity into the system permanently reduce the need for SLR of 25% to 24%. RBI may buy shares worth Rs 480 billion. RBI said that you are not comfortable with the slow decline in inflation. This was the domestic demand and structural factors. Non-food inflation has also started looking up. Looking ahead RBI is that inflation would grasp at the end of March by 5.5% point out that before. The estimated inflation rate at year-end could be revised upward revision in January 2011th However, could the estimated GDP growth for FY11 from the current estimate may be revised from 8.5%. A higher inflation rate is expected 2011unless January is significantly reduced and simplified the inflation pressure significantly.
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