RBI’s
Monetary Policy
Yesterday’s RBI’s monetary policy has surprised almost economic experts
and advisers as majority of them had not anticipated the increase in interest
rate. In its third-quarter review of monetary policy RBI has hiked the repo
rate to 8.0% . CRR has remain unchanged. RBI has emphasised on bringing down CPI (Consumer Price Index)
inflation to 8% and further bringing down to 6% in next 24 months.
It clearly indicate that the future move of interest rate depend on CPI
mainly. I expect CPI inflation would be around 8.5% during 2014-15. However, in
December headline CPI came down due to falling vegetable prices but core CPI inflation
was still high at 8%. WPI (Wholesale Price Index) had also picked up in
December 2013.
Difference
between Headline CPI and Core CPI:
Very often we read and listen about headline CPI and core CPI but many
people do not understand it. Core CPI index mainly consist with housing,
clothing, bedding, footwear & miscellaneous items but it does not include
food and fuel item. In the other side headline CPI includes food and fuel item
also.
Along with inflation there is some weakness in currency front so it is
another important factor for RBI for further monetary policy. There are still
downside risk of rupee against dollar exist.
For more detail and any
other query related investment, you can contact me through my email.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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