oppn parties MPC: Status Quo On Rates And Accommodative Stance Maintained

Story Of The Day

Authoritarian & Insensitive
OPINIONS : Strongly Expressed

May 31, 2023

People Are Talking About

BJP's Animated Video Says Modi's Journey Will Continue

News Snippets

  • Karnataka HC has ruled that a harassment complaint lodged by a wife after receiving a divorce notice from the husband loses its weight in the eye of the law and quashed the FIR filed by a women against her husband and in-laws
  • 35 people killed in renewed violence in Manipur, 30 of them militants
  • Manipur boils on the eve of Home minister Amit Shah's visit as militants strike, vandalize MLAs home and loot armouries
  • Kerala chief minister P Vijayan says Centre's decision to cut the borrowing limit of the state is 'sadistic' and shows its negative mentality towards the state's development
  • Rahul Gandhi recieves passport, set to travel to the US
  • Centre said that the march-to-Parliament by wrestlers was a 'deliberate provocation'
  • Prime Minister Modi inaugurates the new Parliament building, calls it 'cradle of empowerment'
  • Mamata Banerjee will most likely attend the opposition meet called by Nitish Kumar in Patna
  • With container prices, which were on fire, crashing by 40% YoY, importers and exporters in India heaved a sigh of relief as the burden of high freight costs will reduce
  • In an aim to push lenders to manage risks better after the US financial crisis, the RBI has reviewed bond value norms
  • 14 countries under the Indo-Pacific Economic Framework (IPEF), including India, entered into an agreement to boost supply chains and counter China
  • Malaysia Cup badminton- H S Prannoy wins the title beating Weng Hong Yang of China 21-19,13-21, 21-18
  • Yashasvi Jaiswal replaces Ruturaj gaikwad as stand-by opener for the WTC final
  • IPL final washed out due to rain, rescheduled for today, the reserve day
  • In a shameful incident, Delhi Police manhandled international wrestlers when they sought to march peacefully to the new Parliament building to highlight their greivances, detained some top wrestlers
Fifth IPL title for Chennai as Ravindra Jadeja hits 10 off last two balls to spoil the party for Gujarat Titans
oppn parties
MPC: Status Quo On Rates And Accommodative Stance Maintained

By A Special Correspondent
First publised on 2021-10-09 06:56:07

The Monetary Policy Committee (MPC) of the RBI has maintained status quo on interest rates and will continue with its accommodative stance. The repo rate at 4 percent and the reverse repo rate at 3.35 percent were left untouched as the MPC felt that with the economy showing signs of returning to normal after the disruption caused by the pandemic, it needed continued support in the form of money for investment at reasonable rates. However, the RBI was of the view that with the liquidity overhang of nearly Rs 13 lakh crore in the system, it was now times to mop up the excess liquidity, but in a gradual and calibrated manner. Hence, it has decided to stop G-SAP for now but has said that it was ready to start it again if needed. The other measures announced were increasing the limit of IMPS transaction from Rs 2 lakh to Rs 5 lakh to facilitate easy e-payments and geo tagging for payment system touch points.

The apex bank said that the liquidity in the system was at an average of Rs 7 lakh per day from June to August this year. But in September, it rose to Rs 9 lakh crore per day and has further risen to Rs 9.5 lakh crore per day in October, leading to a liquidity overhang of nearly Rs 13 lakh crore. Since it could lead to inflationary pressures, the bank has decided to mop up the excess liquidity through liquidity adjustment facility. The immediate effect of these announcements was a stiffening of bond yields which rose by 5 basis points. The apex bank also said that the rise in fuel prices needs to be checked by lowering taxes and not through monetary policy.

The accommodative stance - which means that the apex bank is willing to continue with the same rates or even lower them if need be - is the best way to support the economy now. So is the decision to mop up a part of the excess liquidity and the willingness to resume G-SAP if needed. The need now is to reorient the lending policy of PSU banks so that it is not ultraconservative and businesses get funds to start new projects or expand existing ones. 

Other Stories You Make Like

Editorials

Inaugurating The New Parliament: Something Was Definitely Missing

Inaugurating The New Parliament: Something Was Definitely Missing

Reviews- Movies

Sirf Ek Bandaa Hi Kafi Hai: Riveting Courtroom Drama

Sirf Ek Bandaa Hi Kafi Hai: Riveting Courtroom Drama

Reviews- OTT & TV Shows

Garmi: Tigmanshu Dhulia In Familiar Zone

Garmi: Tigmanshu Dhulia In Familiar Zone

In Depth

Congress De-Saffronizes Karnataka

Congress De-Saffronizes Karnataka

Editor's Pick

Negating The Supreme Court Order On Delhi

Negating The Supreme Court Order On Delhi
© 2014 India Commentary. All rights reserved.