Monday, June 17, 2013

RBI Monetary Policy

RBI kept all the key rates & reserve ratios unchanged in today’s quarterly monetary policy.  This was in line with my view on 13th June.  RBI has expressed its concern regarding retail inflation as measured by Consumer Price Index being at an elevated level of 9.3%

In its outlook, has subtly conveyed its intent of having a very little room to play on the monetary front given the macro economic challenges, while pointing towards the government to provide faster clearance of projects, creating conducive environment for private investment as the key ingredients to reinvigorate growth. With less than a year for general elections, Government will seldom take any major policy related decisions.

Given this backdrop, incrementally investors should avoid long duration funds and focus on short term funds. Equity markets will remain volatile in the near to medium term. It’s advisable to take the SIP route with a diversified equity fund as against bulk investment which will enable investors to ride on the market volatility.

 In the recent past, we have been witnessing plethora of companies luring investors with high interest rates on their fixed deposits. FD’s by their nature are un secured & investors should ideally consider companies that possess the highest credit rating (AAA).

Ramanathan dwarakanathan


1 comment:

  1. RBI's hands are tied. They should have tried to reduce the interest rates and inflation and interest rates are like chic and egg.

    I feel before the elections ,just to bring down the inflation further RBI will resort to a goo rate cut