The Credit Policy as a whole is wise and quite good for equity markets. The governor has gone in for stability and has made minimal changes in his maiden policy.
Some people even expected that given the rise in inflation, an upward pressure on interest rates has begun.
Stability in interest rates with no further downward bias should result in money moving out of the debt market.
Also, we should see a higher number of public issues from certain sectors of the economy that are doing well.
By not cutting the Bank Rate and CRR, the RBI has only reduced the immediate relevance of these tools in its Monetary & Credit Policy.
The RBI, as indicated, can reduce the Bank Rate or Repo Rate whenever the situation warrants or additional liquidity is required in the money market.
CRR, at 4.5 per cent, is still 150 bp higher than RBI
