oppn parties MPC Says Inflation Transient, Holds Rates, Maintains Accommodative Stance
OPINIONS : Strongly Expressed

January 29, 2023

People Are Talking About

Welcoming 2023

News Snippets

  • RBI governor Shaktikanta Das says that inflation is easing and the current account deficit is manageable
  • Adani Enterprises FPO sees just 1% subscription on the first day as the stock goes down to Rs 2762, much below the price band of Rs 3112-3276
  • Stocks bleed on Friday post the Hindenburg report as Adani stocks are hammered: Sensex loses 874 points to 59330 and Nifty 287 points to 17604
  • Rs 263cr TDS scam detected by the I-T department. A mid-level officer was the kingpin and had amassed huge wealth
  • Women's U-19 World Cup -India reaches the final by beating New Zealand by 8 wickets
  • New Zealand beat India by 21 runs in the first T20 as spinners choke Indian batters
  • Sania Mirza and Rohan Bopanna lose in the Australian Open finals
  • Sania Mirza and Rohan Bopanna lose in the final of the Australian Open
  • India to play New Zealand in the first T20 of the three-match series in Ranchi today
  • RBI has proposed special purpose vehicles (SPEs) mechanism to sell bad loans to interested investors via securitization
  • JD(U) decides not to attend the Bharat Jodo Yatra finale in Srinagar
  • Hindenburg defends its report on the Adani group, dares Gautam Adani to sue it in the US
  • BJP's talks with Tipra Motha in Tripura make no headway but the party is confident of winning in the ensuing elections
  • Pathan is a super hit at the box office: Rs 57cr in India (worldwide Rs 106cr) on Day 1 and then Rs 70cr on Day 2 which was Republic Day holiday
  • Centre tells Delhi HC that Covid vaccines can't be mixed when taking the second dose
A Mirage2000 and A Sukhoi 30 of the Indian Air Force on a training mission crashed separately, in Bharatpur in Rajasthan and Morena in Madhya Pradesh, killing one pilot
oppn parties
MPC Says Inflation Transient, Holds Rates, Maintains Accommodative Stance

By Ashwini Agarwal
First publised on 2021-04-08 05:31:46

The Monetary Policy Committee of the RBI has decided to maintain status quo and keep the key rates unchanged while continuing to maintain an accommodative stance despite inflation not being in the comfort zone. This, the MPC felt, is necessary to ensure the growth of the pandemic-ravaged economy. The MPC has rightly deduced that the inflation being witnessed now is temporary and is due to the high prices of commodities in the global market and logistic constraints. It feels that this cost-push inflation will subside once commodity prices ease, as crude prices have already started showing a downward trend.

The two other big issues that the MPC tackled was ensuring a fair amount of liquidity in the system and not allowing bond yields to rise to very high levels. The RBI has decided to buy Rs 1 lakh crore worth of g-sec from banks in the first quarter of FY 2022. This measure will keep bond yields in check while providing liquidity to banks. This will provide additional liquidity to banks to lend to priority sectors and boost growth.

The RBI has also decided to provide additional liquidity support to financial institutions such as NABARD, SIDBI and NHB in a series of specific measures. This will provide much-needed boost to agriculture, small enterprises and housing. The policy decision to provide credit to the agriculture sector will boost growth in the one sector that has consistently performed well despite lockdowns.

In another good move, the RBI decided to form a committee to work out the role and functions of asset management companies. This is a much needed reform as with a bad bank on the cards and the need to provide impetus to the IBC and resolution of stressed assets, it needs to be properly defined what role asset management companies will play in redeployment of such assets.