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The RBI is likely to take a “everything” stance today, the Federal Reserve Board of Governors

Mumbai: Reflecting the uncertainty surrounding recent policy decisions, economists believe that the best course of action for the Reserve Bank of India’s interest rate setting panel on Wednesday is to repeat its commitment to maintain. Financial policy Adaptive – US Federal Reserve Board – triggered by a fierce second wave of Covid-19 infections in the country.

In the aftermath of the Monetary Policy Committee’s February meeting, discussions among economists begin to guide the central bank on its intention to finally roll back the very loose policy steps adopted in the midst of a pandemic. It was time or not. In 2020.

Discussions were held in the context of the expectation that the economy would recover in the second half of 2021 as government fiscal stimulus measures in the budget and accelerated vaccination normalized various activities.

Today, the tighter than expected limits of Maharashtra, the country’s leading case road state, cast doubt on expectations for double-digit economic growth.

“Amid improved capacity utilization and regaining consumer confidence, the sense of growth comfort seen in the previous policy could be reassessed by this policy,” said Madhavi Arora, an economist at Emkay Global Markets. It’s highly sexual. ”

The Monetary Policy Committee is expected to support interest rates on Wednesday, but reaffirms its “whatever it needs” commitment to economic recovery and maintaining adequate liquidity.

RBI Governor ShakticantadasSaid at a recent event that the central bank does not need to revise its 10.5% GDP growth estimate for the current fiscal year. However, Arora believes that the tone of the growth policy statement will be of concern in the new wave of Covid and the local blockade.

Market participants also analyzed the outlook for the inflation rate-setting panel, taking into account the rise in the consumer price index-based inflation index in February and the continued rise in global commodity prices from metals to agricultural products. I will.

“While global supply chain turmoil and associated shortages have boosted input prices in the short term, companies’ pricing power remains weak. As the turmoil eases, so does price pressure. It should be done, “Edelweiss Securities said in a memo.

Market concerns about inflation, which were prominent in February and early March, have shifted to further damaging economic demand with the resurgence of COVID-19 restrictions. Economists, who were previously concerned about the impact of loose monetary policy on financial stability at a time when the economy was expected to grow by more than 10%, hope that policy action during the crisis will last longer. ..

“The economic recovery has been strong so far, but we haven’t escaped from the health crisis yet. This has led to services that are slowly heading towards normal, especially in transportation, culture and social space. Demand uncertainty is increasing, “said Prithviraj Srinivas, economist at Axis Securities, in a memo.

The government and central bank announced a curfew earlier today in Delhi, as the current pace of vaccination is not yet sufficient to inoculate the critical mass of the masses in time for a full resumption of the economy. Some people are hoping that will provide new relief for stress in the sector.

“The question for RBI is whether to keep broader financial conditions at crisis levels or to set exit routes and take specific steps to provide relief to the targeted stress sector,” Srinivas said. He said.

In any case, the central bank’s claim that its extraordinary accommodative monetary policy needs to stay longer has become much more plausible to investors with the second wave of COVID-19. ..

The RBI is likely to take a “everything” stance today, the Federal Reserve Board of Governors The RBI is likely to take a “everything” stance today, the Federal Reserve Board of Governors

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