RBI Monetary Policy Review - Liquidity Normalisation Signalled Amid Status Quo On Rates, Stance: ICRA
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ICRA Research Report
In the fourth bi-monthly monetary policy statement for FY22, the Monetary Policy Committee maintained a status quo on the repo rate, and kept the monetary policy stance accommodative with a vote of 5:1.
Despite the Q1 FY22 gross domestic product growth falling short of the MPC’s projection, it maintained its expectation of a 9.5% GDP expansion in FY22, led by an upward revision in the forecasts for Q2 FY22 and Q3 FY22.
Moreover, its FY22 consumer price index inflation forecast was pared to 5.3% from 5.7%, with risks broadly balanced, given a benign outlook for most food prices.
As expected, the Reserve Bank of India refrained from hiking the reverse repo rate without having adequately prepared the markets for the same.
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