RBI does well to hold rates, shift focus to foreign capital |
The June meeting of the RBI’s Monetary Policy Committee was held against a challenging economic backdrop. Inflationary pressures have been building up, capital has been flowing out, the rupee is under pressure, and the underlying growth momentum remains unpredictable. The MPC, however, despite suggestions to the contrary, chose to keep interest rates unchanged at 5.25 per cent — rightly so — and also continued with the neutral stance. The continuing uncertainty over the conflict in West Asia and its spillover effects on growth and inflation call for a wait-and-watch........