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The
monetary policy is an event during which the RBI Governor announces the
change in interest rates if any. By managing the interest rates, the RBI
Governor controls liquidity in the system and also balances
growth–inflation dynamics.
RBI monetary policy on September 30, 2014
RBI in the Fourth Bi–Monthly Monetary Policy Statement 2014–15 left the
rate at which it lends to the banks unchanged at 8.00%, which was in line
with the market expectations. RBI kept the rates unchanged post their
assessment of the current and evolving domestic/international macroeconomic
and geopolitical environment.
These policy measures were taken considering the fact that though Consumer
Price Index Inflation has eased in the recent months, it is still significantly
higher than RBI´s stated inflation target of 6% by January 2016.
We believe that if the international global commodity (oil and non–oil)
prices remain benign along with lower domestic food prices, it would lead
to lower inflation in next few months. This should provide room to the RBI
to reduce interest rates in the future as and when it gets convinced about
meeting the 6% target for CPI inflation by January 2016.
Overall the fundamentals for the economy are continuously improving and
should lead to high growth with acceptable levels of inflation. Therefore,
we sincerely recommend that policy holders should continue paying their
premiums regularly and remain invested in the choice of their fund(s) as
per their risk appetite. This would help policy holders achieve their long
term financial goals.
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