InvestorQ : What were the major highlights of the monetary policy announced by the RBI on 06 August?
Arti Chavan made post

What were the major highlights of the monetary policy announced by the RBI on 06 August?

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Rutuja Nigam answered.
4 months ago
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Here are some of the key highlights of the monetary policy announced by the RBI on 06 August.

· Repo rates were maintained at 4% keeping the reverse repo rate at 3.35% and the pegged MSF and bank rate at 4.25%.

· RBI kept the stance unchanged as accommodative and promised to remain accommodative till inflation was not caused by durable growth.

· Inflation expectations were raised by 60 basis points from 5.1% in the previous policy statement to 5.7% in the current policy. GDP growth was maintained at 9.5%.

· RBI to infuse Rs.50,000 crore via TLTRO into the money markets in two tranches in August to keep the money markets liquid.

· RBI hinted at positive cues in the form of gradual opening up of the economy and a good revival in monsoon, likely to help India come out of the crisis sooner.

· RBI expects inflation at 5.9% in the second quarter; 5.3% in third quarter; and 5.8% in the fourth quarter of 2021-22. Inflation expectations have been raised across.

· Growth has been front ended implying that the GDP positive impact may be felt sooner due to the quick and effective response to COVID 2.0.

· Reason for inflation is not just demand but supply since aggregate supply is also lagging below pre-pandemic levels resulting in commodity inflation.

· RBI governor defended the protracted rate pause and lengthy accommodative stance as a compulsion seen as an outcome of the pandemic.

· RBI extended on-tap liquidity for stressed corporates by three months to December 31 and also increased the time for stressed companies to meet financial parameters.

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