The Managing Director and Chief Executive Officer of Karnataka Bank Ltd, P Jayarama Bhat, has said that the continued focus on meeting the inflation glide path while retaining the inflation target at 5 per cent for March 2017, along with supportive liquidity measures to meet the growth target of 7.6 per cent for 2016-17, underlines the stern, at the same time accommodative stance in the guidance of RBI.

With inflation currently at a 22-month high of 5.77 per cent, closer to the upper tolerance limit and a moderation in the same could be some time away, RBI has kept the policy rates unchanged, he said.

So far the monsoon has been normal and the same will be the crucial factor for next round of actions on the policy rates, as it can give some respite to higher food prices. Besides, minimum support prices, farming costs and international food prices will be also other important factors.

Liquidity in the banking system has improved substantially since April as the RBI announced a number of measures to improve the durable liquidity situation with asset purchases and sales and to bring the same to a position closer to neutrality, he added.

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