Monetary Policy - What the RBI will do?

We have the Reserve Bank of India (RBI)  to come out with the next review of the Monetary policy by the end of January 2010. With the expansionary policy last year, the RBI was able to do some justice. The indicators currently points towards reversing or taking back the expansionary policy in the coming review. This may put a  cap on the rising prices. 

The current liquidity position is good, so we can expect an increase in the interest rates. Whoever looking out to invest in Housing because of lower housing interest rate, be quick! The interest rates may go up in Jan 2010.

The RBI may hike the Cash Reserve Ratio (CRR), this will reduce the liquidity in the market. I hope all will know what CRR is. Refer my posting on 28th Jan 09. To put it simple, it is the deposit that a bank has to keep with RBI. With the money moved out of the banks to lend, the liquidity will be tightened.

It looks like the RBI may come out soon with their recommendations. Let us wait and watch what the next steps of RBI.



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