Bank Policy Tuesday: Quarterly review cannot shake off jitters – Taking on the mountain

..and not the molehill

 

Fiscal policy

Fiscal policy (Photo credit: Wikipedia)

 

 

 

This is that kind of belief that turns policy makers into Monster characters as most of the markets are certain of a humdrum ho hum restrictions will remain for some time with an even optimistic note or two in tomorrow’s policy announcement.

 

But markets cannot help but respond to the coming policy event with trepidation and declining interest as they try to still assume a worse scenario. It is however not changing the fact that Rupee is under pressure and the policy easing initiated one policy date earlier than required has died an equally abnormally death and will not ensue to support any domestic investment growth.

 

As has already been proved however, much of Corporate India was actually not using credit probably already on its books as credit flows slowed to an all time low of year/year growth of 13.5% last month and has improved since.

 

The Reserve Bank of India thus having responded worthily to a Hobson’s choice is now more or less resigned to following it up as a Global cycle of lower growth and incomplete recovery has probably been ignored by the markets in the assumption that India’s outperformance therein was because of only its global trade posits and thus new investments continuing to elude India just turned into a chaining of expectations gone awry from no new investments making it as a suspended fiscal policy and reform because of political middle of the line voting lines cannot be repaired by any Central Bank. However India’s Hindu rate of growth posit may also be tested despite the recognition of this failure widely (and the completion of this government’s agenda by political fear) in terms of a requirement to carry Interest rates to double digits for at least a decade or two as there is no new consumer credit or consumpion demand except in unsecured loans and Housing and Auto markets suffer a chaied breakdown from the slowdown improbable but still awaited in th event growth recovery does not come.

 

Infrastructure investments should not have been shot in the foot midway and the wholesale bank  portfolios are unlikely to be able to stand to the situation in case Deposit rates start rising further from here which is always a binary possibility thus making it a half chance too.

 

 

 

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