Tuesday 19 March 2013

Expect increased market volatility on RBI guidance

 

 

 


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RBI guidance on rate cuts will increase market volatility

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RBI 19th March 2013 Policy Review

RBI 19th March Rate Cut helps Government but not Economy

The question the RBI will now have to ask itself is “what purpose will a status quo on policy rates achieve?” If the answer is that it will contain inflation expectations leading to a fundamentally stronger economy that can in turn lead to sustainable economic growth, then it is best to keep rates on hold. On the other hand if no rate cuts lead to inflation expectations remaining high and economic growth falling off a cliff then rates should either be pushed up or lowered. Doing nothing does not help.

 

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Have a good day

Regards

 

Arjun Parthasarathy

Editor: Investors are Idiots.com

www.investorsareidiots.com

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