Not completely detached...

Article;
Monetary-policy review why RBI kept rates unchanged despite high inflation.

Comment;
We are completely surprised by the RBI moves but nevertheless he has maintained that the chances of a rate hike in next policy review can not be ruled out given high food and fuel inflation. There are two components of the food category which has made him postpone a rate hike… one is prices of vegetables and two, price of cereals, especially, wheat and rice. I think he considered price of vegetables while deciding a pause which showed a decline in recent days which again i think is the reason behind the rate hike pause which probably made him believe that inflation is on decline, moreover, the government showed its commitment to reduce fiscal deficit and remove supply-side bottlenecks by releasing more cereals to market. High fiscal deficit and supply side problems were the major issues everybody was lecturing government on… Every body was almost agreed that the problem of inflation was due to supply-side and higher rural wages made the task of lowering inflation a little more cumbersome. Moreover, a good monsoon this year makes the inflation-story more of twist and turns because it will increase demand within the rural economy and will put further pressure on the prices in the future. Therefore, we should definitely not think that we have bottomed out. Our RBI governor has overlooked the US tapering position which could be another turning point before the economy turns-out. I think our Governor has not completely detached himself form the government…