One event that catches attention of the investor community every three months is the monetary policy that is announced by the Indian central bank, the RBI…
…like it did today when the RBI announced its quarterly review for the monetary policy for 2011-12.
Every move the RBI makes, even if it is irrelevant to the long term performance of the Indian economy or financial markets, is dissected and discussed threadbare.
Leave the RBI Governor aside, expert opinions flood the newswires from brokers, analysts, and fund managers. Even the Finance Minister shares the limelight in giving his opinion on the RBI’s policy.
Amidst all this, the RBI Governor is either made a hero or a villain, depending on how well he’s taken care of the market’s expectations.
Now the question is – why is monetary policy such a widely followed event in the investor community? What impact does it have on stock prices?
Let’s try to answer these questions.
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