Drop in IIP may prompt RBI to halt rate hikes

MUMBAI: THE RBI has said that sharp drop in the index of industrial production numbers would prompt a ‘wait and watch’ policy stance, indicating that there may not be any more rate hikes this year.

Speaking on the on the sidelines of the annual CFI summit RBI deputy governor Subir Gokarn said, “The signals we are getting from the IIP numbers, is probably that it is time to wait and watch. And also, we need to give it time for the policy rates to transmit into the system.”

However, there were two other factors that gave out positive signals namely, the tax revenue collections and corporate earnings, which did not exactly point towards a meltdown in the economy he said.

The RBI has been grappling with a situation , where the system is falling short of funds to the tune of over a lakh crores on a daily basis, which is clearly much above the RBI’s level of comfort and yet on the other, the inflation refuses to be tamed.

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