RBI may shift focus to inflation

Although in the first policy review of the current financial year, the central bank kept key rates unchanged and maintained an accommodative stance, there is a clear shift in focus and the rate hike may start in August, experts and industry leaders said.

Shaktikanta Das has maintained the policy stance loose since taking over as RBI Governor. Former Finance Ministry top bureaucrat Das was appointed RBI Governor in December 2018. Even before the Covid pandemic hit, Das opted for a loose monetary policy stance to support growth. In May 2020, he cut the key policy rates to a record low to support the economy hit by lockdowns and the pandemic. On Friday, Das-led six-member Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate unchanged at 4 per cent and maintain an accommodative stance.

The continuation of Reserve Bank of India’s accommodative stance is welcome. The statement does allude to a withdrawal of accommodation clearly signaling towards normalisation of liquidity management to ensure inflation remains within target,” said Sanjiv Mehta, President of industry body FICCI

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