The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), which kept the repo rate unchanged at 4 per cent and maintained the reverse repo rate at 3.35 per cent, during its meeting held on April 7, had observed that the renewed jump in COVID-19 infections in several parts of the country and the associated localised and regional lockdowns, add uncertainty to the growth outlook.
RBI Governor Shaktikanta Das while addressing the committee, had noted that given the fact that the new fiscal has just begun and given the present uncertainties, it would be too early to give an explicit time-based forward guidance.
According to the minutes of the MPC meeting which were released by the RBI on Thursday, the panel said that though its forward guidance in the past one year has helped in anchoring market expectations and navigating the recovery from crisis, under the prevailing circumstances, a forward guidance would be a bit premature.
“The forward guidance in terms of securing a sustainable growth on a durable basis itself testifies to our commitment to continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target, going forward. The need of the hour is to effectively secure the economic recovery underway so that it becomes broad-based and durable,” said Mr Das while addressing the MPC meeting.
In such an environment, monetary policy should remain accommodative to support, nurture and consolidate the recovery, he noted further.
“We need to continue to sustain the impulses of growth in the new financial year 2021-22. I vote to keep the policy rate unchanged and to continue with the accommodative stance as long as necessary to sustain growth on a durable basis, while ensuring that inflation remains within the target going forward. The RBI would take all steps, as needed, to ensure orderly conditions in the financial markets and to preserve financial stability,” Mr Das said in his closing remarks.