RBI policy delivered exactly the script market was anticipating. The central bank kept rates unchanged at 4% for the 22nd straight month while reassuring the market that mint street will maintain the ‘accommodative stance’ for as long as needed. RBI Governor warned that pre-emptive normalisation of policy could kill the 'nascent and hesitant' recovery that is yet to gain footold
Surprisingly the RBI downplayed the inflation risk facing the economy as the Governor even as he raised the forecast for the current fiscal to 5.7% from 5.1%. RBI chief stated that the price pressures on the economy are largely transitory and he does not see a need for a policy or forecast change to address this.
Speaking on the concerns of Covid, the RBI Governor said that "The need of the hour is not to drop our guard and remain vigilant against a third wave. Our measures are aimed at alleviating distress, promoting growth, and keeping the financial system healthy"
The RBI maintained a growth forecast for the current fiscal year at 9.5% but anticipate a big turnaround in FY’23.