The Monetary Policy Committee (MPC) status quo decisions strongly back up various RBI’s communication on continued monetary policy support till growth revival is broad-based, said Rajni Thakur, Economist, RBL Bank.
The MPC unanimously voted today to keep the policy repo rate unchanged at 4% in the first bi-monthly monetary policy for fiscal year FY22. Further, the six-member committee also decided to maintain an accommodative stance.
Likewise, the marginal standing facility (MSF) rate and the bank rate remain unchanged at 4.25% each. The reverse repo rate stands unchanged at 3.35%.
On the monetary policy, RBI said “Rate actions in term of status quo was on expected lines.”
“The key take away were two: first, RBI’s bend towards looking through inflationary pressures in current uncertain times and err in favour of growth and second, RBI’s commitment to ensure smooth execution of government’s huge borrowing program by a separate G-sec Acquisition Program to purchase government bonds in FY22,” Thakur added.
Further, the RBL Bank economist said that this should help bond market sentiments, which was the one major issue currently in the overall macro and financial landscape in the economy.
“With assured support from the central bank, the markets will hopefully look beyond immediate concerns and help RBI’s objective of a flatter yield curve,” Thakur said.
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( With inputs from indiainfoline)