oppn parties MPC Says Inflation Transient, Holds Rates, Maintains Accommodative Stance

News Snippets

  • Sikh extremists attacked a cinema hall in London that was playing Kangana Ranaut's controversial film 'Emergency'
  • A Delhi court directed the investigating agencies to senstize officers to collect nail clippings, fingernail scrappings or finger swab in order to get DNA profile as direct evidence of sexual attack is often not present and might result in an offender going scot free
  • Uniform Civil Code rules cleared by state cabinet, likely to be implemented in the next 10 days
  • Supreme Court reiterates that there is no point in arresting the accused after the chargesheet has been filed and the investigation is complete
  • Kolkata court sentences Sanjoy Roy, the sole accused in the R G Kar rape-murder case, to life term. West Bengal government and CBI to appeal in HC for the death penalty
  • Supreme Court stays criminal defamation case against Rahul Gandhi for his remarks against home minister Amit Shah in Jharkhand during the AICC plenary session
  • Government reviews import basket to align it with the policies of the Trump administration
  • NCLT orders liquidation of GoAir airlines
  • Archery - Indian archers bagged 2 silver in Nimes Archery tournament in France
  • Stocks make impressive gain on Monday - Sensex adds 454 points to 77073 and Nifty 141 points to 23344
  • D Gukesh draws with Fabiano Caruana in the Tata Steel chess tournament in the Netherlands
  • Women's U-19 T20 WC - In a stunning game, debutants Nigeria beat New Zealand by 2 runs
  • Rohit Sharma to play under Ajinkye Rahane in Mumbai's Ranji match against J&K
  • Virat Kohli to play in Delhi's last group Ranji trophy match against Saurashtra. This will be his first Ranji match in 12 years
  • The toll in the Rajouri mystery illness case rose to 17 even as the Centre sent a team to study the situation
Calling the case not 'rarest of rare', a court in Kolkata sentenced Sanjay Roy, the only accused in the R G Kar rape-murder case to life in prison until death
oppn parties
MPC Says Inflation Transient, Holds Rates, Maintains Accommodative Stance

By Ashwini Agarwal
First publised on 2021-04-08 05:31:46

The Monetary Policy Committee of the RBI has decided to maintain status quo and keep the key rates unchanged while continuing to maintain an accommodative stance despite inflation not being in the comfort zone. This, the MPC felt, is necessary to ensure the growth of the pandemic-ravaged economy. The MPC has rightly deduced that the inflation being witnessed now is temporary and is due to the high prices of commodities in the global market and logistic constraints. It feels that this cost-push inflation will subside once commodity prices ease, as crude prices have already started showing a downward trend.

The two other big issues that the MPC tackled was ensuring a fair amount of liquidity in the system and not allowing bond yields to rise to very high levels. The RBI has decided to buy Rs 1 lakh crore worth of g-sec from banks in the first quarter of FY 2022. This measure will keep bond yields in check while providing liquidity to banks. This will provide additional liquidity to banks to lend to priority sectors and boost growth.

The RBI has also decided to provide additional liquidity support to financial institutions such as NABARD, SIDBI and NHB in a series of specific measures. This will provide much-needed boost to agriculture, small enterprises and housing. The policy decision to provide credit to the agriculture sector will boost growth in the one sector that has consistently performed well despite lockdowns.

In another good move, the RBI decided to form a committee to work out the role and functions of asset management companies. This is a much needed reform as with a bad bank on the cards and the need to provide impetus to the IBC and resolution of stressed assets, it needs to be properly defined what role asset management companies will play in redeployment of such assets.