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    RBI policy has been very positive and a very welcome move: Pawan Kumar Bajaj, United Bank Of India


    “In a way, RBI’s earlier projections on the inflation was a little on the higher side.”

    ET Now
    RBI credit policy is slightly on the dovish side in comparison to last quarter’s policy.
    Talking to ET Now, Pawan Kumar Bajaj, United Bank Of India, says the only hitch in a positive the RBI Credit Policy, was the fact oil prices could go beyond $70.

    Edited excerpts:

    What do you believe has led to this change in RBI stance? Do you agree with the robust growth forecast at 7.4% versus 6.6% in FY2018?

    Whatever this policy stance may be, it is only neutral stance and as for inflation, for the first half they have kept it down. Both these indicators are telling us that they think that earlier, there was need for a cautious stance but that is not there any more. The earlier expectation was they are going to hike rates at the end of the year or the beginning of the next calendar year. I think now they have postponed it for a longer period.

    Their projection for GDP growth at 7.4% for 2019-20 is on the higher side. I feel if inflation remains on the lower spectrum, that is possible and to keep and achieve that level, this neutral stance looks okay to me.

    The only thing we have to see is whatever they are going to meet this growth projection but the only worrying factors are that there is a minimum price that they are keeping on the higher side. If oil prices go beyond $70, one wonders what will go on there. Overall, what we see is on the slightly dovish side in comparison to last quarter’s policy.

    RBI Governor Urjit Patel categorically mentioned that they have to close eye on the global developments. However, lurking trade wars and rising crude prices could completely challenge the growth outlook and inflation outlook. What is your view.

    As we discussed earlier, the policy was on expected lines. The commentary has really been very dovish. The market has taken that in the right earnest. The 10-year yields are down to 7.2%, which means that the dispensation which was given by the RBI in terms of spreading out of the MTM losses would probably not be required in the next quarter.

    This is probably what was expected. In a way, RBI’s earlier projections on the inflation was a little on the higher side. They probably reflect more of what is really happening and the market is reacting to that. The commentary has been very positive and actually it is a very welcome move.

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