RBI ends quantitative easing, keepspolicy ratesunchanged
Hindustan Times|October 09, 2021
For the second time this year, the MPC pushed for a cut in excise tariffs on fuel
Roshan Kishore
RBI ends quantitative easing, keepspolicy ratesunchanged

NEW DELHI: The Indian economy is on a recovery path, but it still needs all the policy support it can get. Given the worrying turn in external economic environment, it is important that the ongoing recovery is expedited, and the festive season will be crucial in achieving this goal.

That's the central message from the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), which finished its customary bi-monthly meeting on October 8, and decided to leave the policy rate untouched and maintain a so-called "accommodative stance", meaning that it will continue to push for growth. RBI also stuck to its forecast of 9.5% growth for 2021-22.

MPC also indicated that inflation is unlikely to be a cause for concern, though, for the second time this year, it pushed for a reduction in excise tariffs on fuel that have seen petrol prices exceed 100 in the country's four largest cities and in many other parts).

MPC's decision counters the view-not just outside but even within the MPC-that RBI should have sent a stronger signal for normalisation of monetary policy by raising the so-called reverse-repo or doing away with the accommodative stance of monetary policy. The reverse repo is the rate at which RBI borrows from banks, and is widely considered an effective monetary tool to deal with situations of excess liquidity.

This story is from the October 09, 2021 edition of Hindustan Times.

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This story is from the October 09, 2021 edition of Hindustan Times.

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