Sensex's 800-point fall: Change in RBI stance to 'Calibrated Tightening' may have been the trigger

The Monetary Policy Committee’s decision to surprise markets with a status-quo on rate hike and a change in stance might have sent markets in a tailspin, experts feel.The MPC voted for 'status-quo' on interest rates at 6.50 percent with a 5-1 vote, the move was against market expectations of a 25 bps hike.

Also, the policy stance has been changed to “calibrated tightening” even when MPC has revised down its inflation expectations for the full year to 4.31 percent from 4.75 percent. The next meeting of the MPC is scheduled from December 3 to 5, 2018.

The decision of the MPC to hold rates is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent, RBI said in a statement.

Source- https://www.moneycontrol.com/news/business/markets/sensexs-800-point-fall-change-in-rbi-stance-to-calibrated-tightening-may-have-been-the-trigger-3017651.html