RBI wait for more time for rate cuts makes sense: Gaurav Kapur, RBS

In a chat with ET Now, Gaurav Kapur, Senior Economist, RBS, shares his views on the RBI credit policy. Excerpts:

Mythili Bhusnurmath: What is your reaction to the Governor’s policy and to the press conference also where he clearly said that he wants to wait for more time? Is that justified at a point like this?

Gaurav Kapur: We have been discussing this over the last couple of weeks. If you go through the policy statement, while the RBI has taken into account the correction in oil prices, they have also listed their concerns on core inflation being fairly high and stable.

Essentially this is the stance the RBI has taken, but at this juncture and with the base effect still to play out in November, it makes sense to wait, especially keeping in mind that their objective now is not Jan 2015 or March 2015, they are now actually looking at Jan 2016 quite clearly as was hinted out in the September policy. That was perhaps a key reason why a large section expected no change in the policy.