The debt crisis in Greece which is feared to extend to many countries in Europe may prompt the Reserve Bank to slow the pace of its exit from the monetary stimulus, experts today said.
“With the uncertainty in the market, the RBI may not prefer to withdraw the support at this stage. The calibrated withdrawal of stimulus may be reviewed,” Citi Bank, Chief Financial Officer, Abhijit Sen said.
Last month, the Reserve Bank upped all key rates by a quarter percent as part of its strategy to gradually withdraw from the easy money stance.
The April inflation data slated to be announced on Friday is crucial to decide the interest rate movement as the central bank has made it clear that it will not tolerate inflation progressing to double-digits.
Bank of Baroda Chief Economist, Rupa Rege Nitsure said that although the Greek crisis is unlikely to make any major impact on India, this may result in volatility in the domestic markets.
“I feel that India may not get impacted immediately by the crisis. But it can create volatility in financial markets, which can generate misleading signals,” Nitsure said.
The monsoon, which is expected to be normal this year is also critical to the movement of interest rate in the economy, she said.
