The escalating debt crisis in Greece and the fears of the contagion engulfing a few other Euro zone economies may prompt the Reserve Bank of India (RBI) to slow the pace of its exit from the monetary stimulus measures, say leading experts.
“With the uncertainty in the markets, RBI may not prefer to withdraw the support at this stage. The calibrated withdrawal of stimulus may be reviewed,” Citi India Chief Financial Officer Abhijit Sen said here today.
Last month, RBI had upped all key rates by a quarter percentage point as part of its strategy to gradually withdraw from the easy monetary stance. The April inflation data, slated to be announced on Friday, is crucial to decide the interest rate movement, as the central bank has made it clear that it will not tolerate inflation progressing to double digits.
Bank of Baroda’s Chief Economist Rupa Rege Nitsure said although the Greek crisis was unlikely to make any major impact on the country’s economy, this might result in volatility in the domestic markets. “I feel that we may not get impacted immediately by the crisis. But, it can create volatility in financial markets, which can generate misleading signals,” Nitsure said.