10 FEB,2020 | MEDC
The RBI’s decision to leave the rates unchanged in its latest monetary policy presented on February 6, 2020, is compatible with market expectations. However, lowering interest rates will be able to support economic growth only up to a certain point, and that is now being rapidly reached. The RBI has done well to now focus its attention on smoothing the transmission mechanism and increasing lending. It has unleashed a stimulus package with a mission to support growth through a string of actions that should bring down the cost of money for banks and encourage them to lend to stressed sectors, including real estate, automobile and MSME. It is more of a credit policy than monetary policy, and it shows the RBI in a favourable light – as a Central Bank that will not hesitate to experiment with viable alternatives when the space for monetary easing is constrained.
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