InvestorQ : Why did the RBI choose to maintain status quo on all the rates in its policy?
Dawn Cherian made post

Why did the RBI choose to maintain status quo on all the rates in its policy?

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Mitali Bhutta answered.
5 months ago
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On 08-Dec the Monetary Policy Committee (MPC) of the Reserve Bank, opted to maintain status quo on all counts. First, the RBI did not make any hawkish noises in the policy. It not only held the repo rates at 4% but also the reverse repo rates at 3.35%. In addition, the stance of the monetary policy was maintained as accommodative. On top of that, the RBI has also promised to keep the markets sufficiently supplied with liquidity. But why?

Probably, there were two major factors that forced the RBI hand to go easy in this policy. Firstly, the Omicron variant has suddenly come to the forefront and its impact is not yet clear. Hence, RBI would rather err on the side of caution. The other big reason was Evergrande crisis in China. It now looks closer to a full-fledged default. It could be a big systemic risk for China and for EMs with its $300 billion outstanding liabilities.

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