The COVID-19 transition and local lockdown prompted RBI Governor Shaktikanta Das and other members of the MPC to maintain interest rates. It has been learned from the minutes of the meeting released on Thursday. During the meeting of the Monetary Policy Committee (MPC) on 7 April, the Governor said that the need of the hour is to effectively secure the ongoing economic recovery so that it becomes large-based and sustainable.
According to the minutes of the meeting released by the central bank, he said that the new surge in COVID-19 transition in some parts of the country and the associated local and regional lockdowns have brought uncertainty into the growth outlook.
Need to maintain growth in FY 2021-22
Das said that in such an environment, a monetary policy should be generous to support, encourage and support recovery. According to him, we need to maintain the pace of growth in the new financial year 2021-22. The MPC consisted of Das, RBI Deputy Governor Michael Debabrata Patra, RBI Executive Director Mridul K. Sagar and three external members. They voted in favor of keeping the repo rate at 4 per cent.
Patra said that the monetary policy should continue to support the economy, unless the basis of recovery is strong and its stability is not ensured. He mentioned that expectations of long-term inflation have remained largely stable despite high volatility in food and oil prices. He said that demand is still weak. Further, he said that he should remain focused on revival on the path of recent increase in inflation and strong and steady growth in the economy.
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He opined that the move would protect the domestic financial markets from global impact and instability, thereby Continue to support favorable financial growth.