Federal Bank – RBI Policy reaction

Federal Bank

The uncertainty created by Covid and the time period of its stay clearly brought out in RBIs statement: Negative growth in FY21, without estimates being clearly stated. Likewise a statement on inflation easing in the second half after firming up in H1 points to the same. While accommodative stance and Rate Cuts are welcome and is the need for the hour, the key continues to be transmission, importantly to the desperate sectors of the economy.

Robustness of Fx Reserves at USD 487 billion covers close to 1 year of imports. The Rate cut, while anticipated, had the 10 yields drop to 5.88%, before recovering. Currently at 5.96%.