Wednesday, January 27, 2010

>VIEW ON THE FORTHCOMING CREDIT POLICY ON JANUARY 29, 2010 (ANAGRAM)

SNAPSHOT: THE WITHDRAWAL OF EXPANSIONARY MONETARY POLICY IN OUR VIEW WILL NOT DERAIL THE ECONOMY

At the Oct09 monetary policy, the RBI withdrew some unconventional liquidity support measures and tightened the prudential norms particularly for the property sector. The monetary policy statement clearly shows that those steps represented the first step towards "exit".

In the coming meeting on 29th January 2010, there is an expectation on 50 bps CRR hike. On a more aggressive stance, there is also a slim possibility of Reverse Repo hike at the same time (25 bps) in the policy meeting. The possibility for this measure remains slim as the current market is in a revers repo mode with approximately Rs 80,000 crore parked with the RBI.

To read the full report: MONETARY POLICY

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