ICICI Securities: Monetary Policy Committee Holds Rates; Policy Largely Non-Event
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ICICI Securities Report
In line with our expectation, the Monetary Policy Committee kept repo rate unchanged at 4%.
Consequently, reverse repo and marginal standing facility rates remain unchanged at 3.35% and 4.25% respectively. The decision to keep rates unchanged was taken unanimously.
In the October 2020 review, new MPC member Professor Jayanth Varma had noted that if an unforeseeable inflation shock were to hit the economy, the MPC may find it hard to remain accommodative.
Since then, inflation has consistently surprised on the upside and growth impulses have proved to be stronger-than-expected. Hence, his vote to keep the stance accommodative is somewhat puzzling.
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