In line with expectations, the RBI left key policy rates unchanged at its monetary policy review in Aug-21, while reiterating its accommodative stance.
Download ReportRBI Policy: A nuanced guidance
In line with expectations, the RBI left key policy rates unchanged at its monetary policy review in Aug-21, while reiterating its accommodative stance. While FY22 GDP growth forecast was retained, forecast for CPI inflation was upped by 60 bps to 5.7%. While the central bank remains committed to provide liquidity support and ensure its targeted distribution, it is also trying to send a soft signal towards the need for a calibrated monetary policy normalization. Slow progress towards interest rate normalization is expected to commence with gradual upward adjustment in reverse repo rate from 3.35% to 3.75% between Dec-21 and Feb-22, followed by an eventual 25 bps hike in the repo rate in Apr-22.