RBI policy: Monsoon and spending pattern hold key for economic revival

The MPC's action has not surprised as CPI inflation for December left little room for a rate cut

There has not been any surprise in the Monetary Policy Committee (MPC) action as the 7.4 per cent CPI inflation number for December provided little scope for going for a rate cut this time. The commentary of the Reserve Bank of India (RBI) is, however, important as it also takes into account the impact of the Union Budget while handing out the decision and here it is positive.

Inflation is likely to remain high in Q4 and the 6.5 per cent number provided is indicative of the fact that even in the next policy, it would be tough to cut