The central bank on Wednesday kept interest rates unchanged and maintained an accommodative stance. The decision came amid a renewed threat to growth due to the resurgence of coronavirus cases in the country
Reserve Bank of India governor Shaktikanta Das has extended 'On Tap TLTRO' scheme by six months to 30 September, 2021. The central bank on Wednesday kept interest rates unchanged and maintained an accommodative stance. The decision came amid a renewed threat to growth due to the resurgence of coronavirus cases in the country. The repo rate has been maintained at 4% and reverse repo rate at 3.35%.
The Monetary Policy Committee (MPC) kept its estimate for economic growth unchanged at 10.5% for the current fiscal, RBI Governor Shaktikanta Das said.
"As expected the MPC has retained the policy rates and stance. Given the inflation being within the acceptable range and considering the policy support required, this decision of the MPC provides relief. The retention of the growth estimates at 10.5% is heartening but given the uncertainty because of the second wave, these estimates could be under stress during the next meeting. The inflation estimates for the FY are also within the range of 2 to 6%. However, any supply constraints due to the second wave could lead to inflation breaching the range," commented Divakar Vijayasarathy, founder and managing partner, DVS Advisors LLP.
"On the other hand, RBI continues with its measures to maintain liquidity. RBI would announce 1 lac crore of G sec acquisition from the secondary market and has extended the deadline for its TLTRO scheme to September 30th. Both these wounds help in maintaining liquidity," he added.
Mohit Ralhan, managing partner and chief investment officer, TIW Private Equity, said, "RBI has maintained the accommodative stance indicating that the primary focus area is growth and economic recovery. It is an extremely positive step especially confirming the continuation of accommodative instance till the time it is required to support the growth. The G-Sec acquisition program is also quite significant to ensure cooling off of bond yield and financial stability given the global uncertainty around the risks related to COVID-19."
"RBI has demonstrated sustained commitment to growth and maintaining adequate liquidity in the financial system, which augurs well for the coming year. Recently, the markets have been under pressure, primarily due to rising cases of COVID-19 and RBI’s policy announcements today can give it a fresh impetus," he added.