Reactions on Fourth bi-monthly monetary policy

Author(s): 

Mr.Avnish Jain, Head – Fixed Income, Canara Robeco
“As expected RBI kept status quo on policy rates while a maintaining “neutral policy” stance. While acknowledging that growth has slowed down, the MPC highlighted risks on CPI inflation arising from global uncertainty, higher crude prices, farm loan waivers and state government’s implementation of seventh pay commission allowances. The MPC noted that while the output gap may have widened, they needed to see more data to separate transient from sustained impact. The MPC expected that as teething problems from GST abated, growth may accelerate in 2nd half.”

Mr. Ranjeet Mudholkar, Vice Chairman and CEO, FPSB India
"On account of the RBI keeping rates unchanged the financial consumer's best bet is to try to take advantage of the expected festive loan offers which the institutions may come up on account of competition among themselves. At the moment the average home loan interest rate is around 8.5 per cent with several banks having reduced their MCLR (marginal cost of funds based lending rate), and not many are expected to lower them any further in the immediate future. However, notwithstanding the temptations one should ensure that due adoption of the One-Third Rule viz. no more than 1/3 of the Income should be used for paying the debts, expenses within 1/3 of the Income range, and ensuring that 1/3 of the Income is allocated towards investments."

Date: 
Friday, October 6, 2017