Maintaining the status quo

12 FEB,2022 | MEDC


 

 RBI has taken a dovish stance by keeping the repo rate unchanged in its tenth consecutive monetary policy meeting. Obviously, growth worries are keeping RBI from policy normalization, and thus, ensuring that the currently accommodative status quo is maintained. The demand for contact-intensive services remains muted, and RBI clearly does not want to risk deviating from its conservative approach. The RBI Governor has clarified that they are not behind the curve, but closely monitoring the evolving situation. RBI needs to manage the government borrowing programme, and populist measures cannot be allowed to derail its agenda. Even if the market is surprised by RBI policy, it is a step in the right direction. RBI is attempting to purchase time with a promise for calibrated action.

 

  *Photo Credit: Google

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