Fixed Income - Pandemic Evolution Of RBI's Balance Sheet: IDFC Research
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IDFC Research Report
In response to a vicious second wave of the pandemic, the Reserve Bank of India governor has recently renewed his battle-cry and reinstated a ‘whatever it takes’ stance.
This represents a shift from the more recent dovish but ‘steady as she goes’ approach and is somewhat more noticeable now given the multi-speed global re-emergence from the pandemic and the risks from imported tightening that it brings.
Apart from a somewhat modified approach to guarding against external volatility which emphasises more the accumulation of a forex reserve warchest, our sympathy with the RBI also lies in our sense that the total public policy response in India so far to the pandemic has been somewhat more nuanced and restrained when compared with many other geographies around the world.
This provides for some degrees of freedom in conducting policy this year, though these have to be still administered with due discipline.
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