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The Reserve Bank of India (RBI) is expected to closely watch the prevailing and unfolding domestic and global uncertainties before undertaking any additional future interest rate cuts, according to P Jayarama Bhat, Managing Director and Chief Executive Officer of Karnataka Bank Ltd.
Reacting to the second bi-monthly monetary policy statement for 2016-17 , he told BusinessLine that in the backdrop of moderately rising inflation, increase in global commodity prices, Brexit, US interest rate volatilities and weak global economic performance, RBI has adopted a cautious approach without altering the policy rates at this stage.
He said that future RBI policy actions would continue to be guided primarily by domestic inflation which will unfold only after a clearer picture of the monsoon and oil price level emerges.
RBI’s commitment to provide liquidity to the banking system and to bring the market to near neutral position in the rupee market and also to supply dollars on FCNR maturity, in case of necessity, will contain volatility in the markets and help the banks to further lower the rates, he added.
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