This was on the cards – as posted earlier today – after $1bn FX poured in, Current Account showed surplus & Inflation outlook ranged ~6% for next three years. The growth plunge warranted it amid benign inflationary outlook.
Yesterday, the yield curve steepened after PIB auction. The space on shorter side is fixed today with 100 bps cut. The coast is clear and curve is steeper!
The govt is – as repeatedly said – acting swiftly to control inflationary trends, especially, the foodflation. The zero-real rates help govt to reduce borrowing costs, reduce fiscal deficit, keep businesses alive, encourage risk-taking and keep jobs intact.
However, the risks to the growth are on the downside. Contraction is here to stay. Currency markets would – or should – show stability because of controlled Current Account and pouring FX reserves from lenders.
Batting first, Reza Baqir has scored a quick fifty in last 10 overs of the match – with a 6.25% cut to 7% – to increase the run-rate. The ball is in the bowler’s (Tax collectors) & climate (covid) hand.
Fiscal ki wo janay ussay paas e wafa tha key na tha,
Tum Reza Apnay Hissay Ki Nibhatay Jatay..
