RBI saw increased inflation but accommodated fuel growth rates – News2IN
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RBI saw increased inflation but accommodated fuel growth rates

RBI saw increased inflation but accommodated fuel growth rates
Written by news2in

Mumbai: RBI on Friday saves the main interest rates that have not changed and the Monetary Policy Committee (MPC) vows to survive with an easy attitude as long as necessary to revive and maintain growth and continue to reduce the impact of Covid on the economy.
Who decided to maintain a policy repo policy (level where the RBI lend money to commercial banks) did not change at 4%.
It also maintained GDP estimates for FY22 at 9.5%, while raising inflation estimates to 5.7%, stating that he estimated the pressure to facilitate the price in front of the arrival of Kharif plants and the impact of the supply side steps.
This was the seventh consecutive meeting when RBI kept interest rates unchanged.
“Outlook for aggregate demand is increasing, but the underlying conditions are still weak.
The aggregate supply is also lagging behind the pre-pandemic level.
While some steps have been taken to facilitate supply constraints, more need to be done.
Recent inflationary pressure is developing concern; But the current assessment is that these pressures are transitories and most are driven by adverse supply side factors, “said RBI Governor Shaktikant Das in his policy statement.
“Implementation of monetary policy during a pandemic has been directed to maintain financial conditions that maintain and rejuvenate growth.
At this stage, therefore, advanced policy support from all sides – fiscal, monetary and sectoral – is needed to maintain newborn and doubtful recovery , “Das said.
The implication for the borrower is that there is not much of the scope of interest rates to go down, except for some pass from previous cuts by lenders.
The RBI has cut the repo level of 250 basis points (100bps = 1 percentage point) since February 2019 and the bank has responded with a cumulative decline of 217 bps at their weighted average loan level.
DAS said that the country was in a much better position than in June 2021 but suggested caution.
“The requirement is not to drop our guards and to remain vigilant about all possible third waves, especially in the background of increasing infection in certain parts of the country,” he said.
Announced MPC’s decision, DAS said that members unanimously maintained the repo level at 4%.
However, one member, J R Varma, voted on the proposal to continue with an ‘accommodating’ attitude.
“The decision to maintain the repo level does not change along with maintaining an accommodating attitude is on the expected path because low interest rates are very important for economic revival,” said S s Malikarjuna Rao, MD & CEO, Punjab National Bank.
DAS said that the new variable level reverses the repo, which can absorb most liquidity instead of reversal of the accommodative phase.
He said that the policy must be nuanced because it must overcome conflicting goals.
Regarding the action against MasterCard, Das said that it was to ensure compliance with the RBI norm.

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