Karnataka Bank Ltd has said that the dovish stance by the Reserve Bank of India (RBI) in the mid-quarter monetary policy review will help the long-term interest rates to soften.
Speaking to Business Line here on Friday, Mr P. Jayarama Bhat, Managing Director of Karnataka Bank Ltd, said it is good that the policy is a forward-looking one. In this, RBI has acknowledged the risks on the growth side whereas indicating that further hikes in interest rates may not be warranted.
As the core inflation is still on the higher side and the likely slippages in this year’s fiscal deficit have not still given a green signal for any rate cuts at this stage, RBI may start the reverse cycle of interest rates during the first quarter of the next financial year, he said.
Even though the market was expecting an OMO (open market operations) calendar, the assurance from the Governor that interventions may be there by way of OMOs wherever conditions warranted will surely help the markets to ease the prevailing strained liquidity conditions, Mr Bhat said.
“The dovish stance of the policy will help the long-term interest rates to soften,’’ he said.