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RBI on 'wait and maintain' mode; giving growth a chance since inflation in check: SBI
economy | Oct 8, 2021 1:01 PM IST
By Latha Venkatesh | Oct 8, 2021 1:04 PM IST (Updated)
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the fourth bi-monthly policy meet for the financial year 2021-22, Governor Shaktikanta Das said, on Friday. Ashwani Bhatia, Managing Director at State Bank of India (SBI), is very positive on the policy. He believes RBI's accomodative stance is because the central bank wants to give growth a chance as inflation is under control.
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged in the fourth bi-monthly policy meet for the financial year 2021-22, Governor Shaktikanta Das said, on Friday.
The MPC voted unanimously to keep policy rates unchanged while it voted 5:1 to maintain an 'accommodative' stance. With no change this time as well, the repo rate currently stands at 4 percent. The reverse repo rate has been maintained at 3.35 percent. The FY22 CPI inflation forecast has been lowered to 5.3 percent from 5.7 percent earlier. The Q2 FY22 CPI inflation is seen at 5.1 percent against 5.9 percent earlier while Q3 FY22 CPI is seen at 4.5 percent compared to 5.3 percent earlier. The Q4 FY22 CPI inflation forecast is retained at 5.8 percent while Q1 FY23 inflation is seen at 5.2 percent.
In an interview with CNBCTV18, Ashwani Bhatia, Managing Director at State Bank of India (SBI), said that he is very positive on the policy.
"I am very positive as far as this policy is concerned, no surprises, inflation under control, wonderful measures and he is still giving growth a chance," he said.
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When asked if RBI's cheap money fuelling equity asset inflation is a potential problem area for the markets in the future, he said, "Index (Sensex) just hit 60,000, Nifty50 is becoming a teen but banks are not there in that market. If somebody is taking advantage in mutual funds (MFs), I don't think there should be any problem. The demand is good. The markets have their own logic of behaving, so to say that RBI should be concerned about five-day lending or six-day lending or there is speculation on the IPO – I think buyers beware, as simple as that. To me, I don't think that is too much of a risk and on the other aspects like should RBI have reacted to what has happened in the energy markets in the last ten days and so on and so forth, I think very wisely, and the governor said this that central banks are at crossroads and it is not about grouping but about country-specific measures. So, I think they are willing to wait and see and maintain the accommodation and it is all oriented towards domestic circumstances. I don't think we should be worried about one lakh crore gain for four-five days through brokerages to HNIs, it doesn't impact the aam aadmi (common man)."
He further explained, "The good part about the policy is that it is extremely balanced, no surprises. The fact that they have announced the calendar also gives you some path about what they are thinking for the next two-three months. So, the calendar till December is welcomed, it would give you some hint that perhaps they are looking to taper down on liquidity but by and large, very accommodative. It is a stance that was maintained, no hawkishness and I love the fact that the governor talked about the boat just coming to the shore but there is a journey beyond the shore also. I would be very positive as far as this policy is concerned."
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(Edited by : Dipikka Ghosh)
First Published: Oct 8, 2021 1:01 PM IST
Ashwani Bhatia
RBI Monetary Policy
reverse repo rate