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The RBI governor ignored the recommendation made by the majority of central banks technical advisory committee (TAC) and went ahead with the 50 basis point hike in RBI’s annual monetary policy. The majority of TAC was in favour of 25 basis point hike for the annual monetary policy; only 2 out of 6 members were in favour of 50 basis point hike, this was disclosed in the minutes of meetings (MoM) of its twenty-fourth meeting of the TAC on Monetary Policy held on April 27.
According to the MoM, while four members of the committee were of the view that the repo and reverse repo rates be raised by 25 basis points each, two members suggested a 50-basis point increase each in the repo rate and the reverse repo rate”. 'In addition to increase in the policy rates by 25 basis points each, one member was of the view that the statutory liquidity ratio (SLR) could be increased by 100 basis points and the repo facility of the Reserve Bank be limited up to 2 per cent of excess SLR securities held by banks.
Earlier D Subbarao, Governor and Chairman of the TAC had gone by the suggestions made by TAC to ensure growth and fight inflation, but this time governor went against the recommendation despite the fear of slowing down the industrial growth. At annual monetary policy review, RBI had raised the repo and reverse repo rate by 50 basis points to 7.25% and 6.25% respectively. This was the 9th policy rate hike from March 2010.
RBI governor was highly criticized by the economist and analyst for this unexpected hike in policy rate to control inflation. According to experts, this 50 basis point hike in policy rates will have adverse effect on the economic growth and investment scenario.
Inflation, calculated by Wholesale Price Index showed moderation to 8.66% in April from 9.04% in March, which is much above the RBI’s comfort level of 5 to 6%. In the monetary policy statement on May 3 governor had said, 'Inflation is inimical to sustained growth as it harms investment by creating uncertainty. Current elevated rates of inflation pose significant risks to future growth. Bringing them down, therefore, even at the cost of some growth in the short run, should take precedence.'
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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