The MPC voted unanimously to keep policy rates unchanged while it voted 5:1 to maintain an ‘accommodative’ stance . With no change this time as well, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent. Experts decode RBI’s October policy stance.
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the fourth bi-monthly policy meet for the financial year 2021-22, Governor Shaktikanta Das said, on Friday. The MPC voted unanimously to keep policy rates unchanged while it voted 5:1 to maintain an ‘accommodative’ stance. With no change this time as well, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent.
To discuss the policy in-depth, CNBC-TV18 spoke with experts and economists, Aditya Narain, head – research, institutional equities of Edelweiss Securities, Taimur Baig, MD and chief economist of DBS Group Research, Anand Bagri, head – domestic markets of RBL Bank, Ashwani Bhatia, MD, SBI, Bhaskar Panda, executive VP and head- overseas treasury of HDFC Bank, Rajiv Anand, executive director of Axis Bank, and Ananth Narayan, professor, SPJIMR.
First up, Baig said, “The policy was a neutral hold. While I was expecting a bit of a hawkish hold, bit of a timeline with respect to more concrete ways of withdrawing liquidity, also maybe some discussion on capital inflow management which seems to be the big issue going forward for emerging markets in general, India in particular, which has been the beneficiary of a very large amount of inflows and how the central bank sees that in an environment where growth has bottomed, inflation may not be as scary as it seemed a little while ago, but we also have an issue of incomplete pass-through in India and that needs to be sort of taken into account as well.”
“Since those issues were not at the front and centre of the governor’s speech, I would interpret that as a neutral hold as opposed to laying the foundation for substantial withdrawal of liquidity, the variable rate reverse repo (VRRR) was widely expected, I don’t think that necessarily adds to any sort of a hawkish tone, so very neutral. I was expecting some discussion on the capital flow management side but found that missing,” said Baig.
Bhatia is of the view that by and …….