Mumbai: Wednesday’s monetary policy announcement is going to be all the more crucial as it is likely to offer some guidance and clarity on the impact of the high-value currency note withdrawal on economic growth and inflation.
Market watchers would expect some information on the number of currency notes printed, the deposits with banks and how the Reserve Bank of India plans to manage excess liquidity in the system.
Here’s a look at the numbers that will surround the policy rate decision.
Inflation continues to soften
Consumer price index-based inflation has consistently eased during this financial year, opening up more space for the central bank and the monetary policy committee (MPC) to favour a rate cut. With a growth hit likely from demonetization (although the estimates of its magnitude vary), it is likely that the monetary policy committee (MPC) would look at ways to spur demand.