RBI decision unlikely to have big impact on GDP growth: Goldman
RBI's decision to hike short-term lending rate and CRR by 50 basis points each will not have any major impact on the country's GDP growth, sayd Goldman Sachs.
By PTI |
NEW DELHI: The Reserve Bank's decision to hike short-term lending rate for banks and the amount that banks need to maintain with the central bank (CRR) by 50 basis points each will not have any major impact on the country's GDP growth, global investment bank Goldman Sachs on Wednesday said.
"We do not think rate hike will have a large negative impact on growth. However, there are downside risks to our GDP growth forecast of 7.8 per cent in 2008-09," Goldman Sachs said in a statement.
While sticking to its earlier forecast of 7.8 per cent GDP growth for India this fiscal, Goldman Sachs said: "There are downside risks to our GDP growth forecast."
Appreciating RBI's decision, the investment banker said it could have positive impact on the rupee value, and projected USD/Rupee value at 43.9, 44.1 and 42.2 in next 3, 6 and 12 months respectively.
The Reserve Bank, in a bid to combat inflation, which rose to a 13-year high of 11.05 per cent, raised the short-term lending rate (repo rate) and CRR, by 50 basis points to 8.75 per cent in two stages, effective from a fortnight beginning from July 5 and July 19.
Further, the Goldman Sachs said tightening of the monetary policy is likely to continue as the RBI, in a statement, has said a continuous vigil is warranted on macroeconomic developments.
On RBI's indication that it could take more steps if needed, Goldman said: "RBI will wait and watch inflationary trends over the next several weeks, particularly signs of pass through to broad-based inflation and broad money growth, before raising interest rates again."
"We do not think rate hike will have a large negative impact on growth. However, there are downside risks to our GDP growth forecast of 7.8 per cent in 2008-09," Goldman Sachs said in a statement.
While sticking to its earlier forecast of 7.8 per cent GDP growth for India this fiscal, Goldman Sachs said: "There are downside risks to our GDP growth forecast."
Appreciating RBI's decision, the investment banker said it could have positive impact on the rupee value, and projected USD/Rupee value at 43.9, 44.1 and 42.2 in next 3, 6 and 12 months respectively.
The Reserve Bank, in a bid to combat inflation, which rose to a 13-year high of 11.05 per cent, raised the short-term lending rate (repo rate) and CRR, by 50 basis points to 8.75 per cent in two stages, effective from a fortnight beginning from July 5 and July 19.
Further, the Goldman Sachs said tightening of the monetary policy is likely to continue as the RBI, in a statement, has said a continuous vigil is warranted on macroeconomic developments.
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On RBI's indication that it could take more steps if needed, Goldman said: "RBI will wait and watch inflationary trends over the next several weeks, particularly signs of pass through to broad-based inflation and broad money growth, before raising interest rates again."
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