The RBI’s decision to keep the key policy rate unchanged ensures a lower interest rate regime and availability of liquidity to support growth under the current economic situation, even as high inflation remains a risk, financial market experts said on Friday.
The Reserve Bank of India (RBI) on Friday left interest ratesunchanged for a third straight meeting as inflation stayed stubbornly high, and said the economy was recuperating fast and would return to positive growth in the current quarter itself.
“The policy stance has, as expected continued to focus on reviving growth with the MPC maintaining its accommodative stance.
At the same time, the statement reinforces the requirement of supply side actions to break the current inflationary spiral. “However, not upsetting the status quo probably has been the theme with regards to liquidity management,” said Rajeev Radhakrishnan, Head of Fixed Income, SBI Mutual Fund.
The Monetary Policy Committee (MPC) of RBI expects inflation to remain elevated, barring some transient relief in winter months and this has constrained monetary policy at the current juncture from “using the space available to act in support of growth”, RBI Governor