RBI may act in first qtr of 2010| RBI should act on CRR first to address liquidity picture

RBI may act in first qtr of 2010; RBI should act on CRR first to address liquidity picture; don’t expect any rate move in Dec; risk of upside on growth forecasts: CLSA

Sharmila Whelan, Senior Economist at CLSA said that RBI should start moving in the first quarter of next year and should act on CRR first to address the liquidity picture. She does not expect any rate move in December. She is calling for mild deceleration in GDP for the remaining two quarters for FY10. She said that the overall risk to upside is on growth forecasts. Government’s ability to manage food price inflation is strong on account of strong grain reserve, she added.

CLSA is of the view that the investment led recovery is taking root. CLSA expects monetary policy tightening in Q1CY10. It expect CRR tightening first and then interest rates. It also expect interim volatility in rupee. CLSA feels that rupee is likely to appreciate next year.

India’s Q2 GDP stood at 7.9% Vs 6.1% (QoQ), Vs 7.7% (YoY). India’s H1 GDP stood at 7% Vs 7.8% (YoY). In Q2, farm sector growth stood at 0.9% Vs 2.7% (YoY), manufacturing sector growth stood at 9.2% Vs 5.1% (YoY), mining sector growth stood at 9.5% Vs 3.7% (YoY), construction sector growth stood at 6.5% Vs 9.6% (YoY), industry growth stood at 8.3% Vs 6.1% (YoY) and services sector growth stood at 9.3% Vs 9.8% (YoY).

No related posts.