In the submission to contain inflation and an application for charge, the India Reserve Bank (RBI) should maintain the status quo on interest rates and maintain the accommodative position in its next review of bi-monthly monetary policy. (MPC), according to experts But traders and analysts find advice that the Central Bank seeks to drain the record liquidity of the banking system, as it increasingly transforms its forex intervention at the market of advances Earlier this month, the Governor of Apex Shaktikanta Das said, “As the markets settle in timings and regular operating and liquidity operations, the RBI will also conduct operations from time to time. to adjust from time to time to manage unexpected and a flow of liquidity so that the liquid conditions in the system evolve in a balanced and uniformly distributed manner. “
At the last MPC review in August, the Central Bank had kept key rates unchanged for the seventh successive time. He held the repo rate, its key loan rate, stable at 4% and the reversed repo rate, the borrowing rate at 3.35% RBI has for the last time the repo rate in May 2020 at a 4% historic low to support the economy of Hit Covid-19. It will be the eighth time RBI maintains its position if it decides to maintain unchanged rates The six-member Monetary Policy Committee (MPC) should meet for three days from 6 October 6. The Governor of RBI Shaktikanta DAS will announce the decision taken at meetings on 8 October.
The experts speak
Pankaj Pathak, fund manager to the quantum investment fund, believes that RBI will maintain the status quo on policy rates, but it can change the guidance before preparing for an increase in the reversed deposit rate by the December policy Since the excess of basic liquidity persists near Rs. $ 12,000 billion, the RBI can provide a roadmap on liquidity management. However, we do not expect any immediate sustainable liquidity absorption measures at this stage because it could raise speculative market actions. The RBI can limit the continuation of liquidity infusion and rely on neutral liquidity instruments to intervene in bond and foreign exchange markets, “he said.
Pathak added that liquidity indications will be the key driver for short transportation obligations, while longer maturity bonds will depend on the GSAP Quantum (purchase of RBI bonds) in the second half of the tax. “Since the government’s borrowing is lower in October 2021 to March 2022; We should expect a reduction of the GSAP program at Q3 Fy22 Suman Chowdhury, Analytical Director, Acuity Reviews and Research Debrew Putak Putak Putak On the maintenance of political rates by adding that the central bank can take steps to recalibrate the excessive liquidity of the monetary system during the two or two-quarters While high-frequency indicators for the month of August-Sep21 reveal that economic activity reaches its pre-pandemic levels and that the risks of another VVID wave are gradually declining, the recovery momentum is always uneven and not anchored in all sectors of the economy, “he noted.
According to Chowdhury, the combination of high high commodity prices, COVID disturbances, the progress of immunization and policy support has enabled the economic recovery and an acceleration of inflation in most developed and developing markets However, RBI estimates that the rise in inflation is “transient”. In August, the Central Bank had increased the estimation of retail inflation for the fiscal year of 2021-22 to 5.7% from 5.1% projected earlier, while maintaining the GDP growth target. for the 9.5% exercise The government in March had asked the RBI to maintain 4% retail inflation with a 2% margin of either year ending March 20, 20026.
“Increasingly, central banks such as the US Federal Reserve have taken a position to moderate the excess liquid system in a progressive way through a reduction in their aggressive purch Although the Wave of Covid-19 remains under control and the vaccination reader has gained a critical mass in the country, RBI should remain vigilant on potential reduced risks due to a third wave of COVID. The former Assistant Governor of Apex Bank R Gandhi reiterated the RBI low interest rate regime that should continue to support economic activities In my evaluation, my standardization or a monetary policy, the tightening in India is several quarters. Certainly, not in the current tax. The economy is relevant, but we have not reached the absolute level pre-coovid 2019 -2019, “said Gandhi to an event organized by the Bengal Chamber of Commerce and Industry in September. “RBI will do (tighten monetary policy) when the economy will increase in a sustainable way,” he said.
