RBI Monetary Policy Reaction: JSA

5 Aug 2022 , 12:05 PM

Aligned to the US FED rate raise, the RBI also increases the repo rate. With several demons to slay, the RBI seems to have chosen taming inflation as its primary goal. Growth forecasts have not been moderated based on strong fundamentals — with larger impetus expected from domestic economic activities. Coupled with this is the policy thrust of insulating India against imported inflation. It is therefore critical for the domestic stakeholders to rise to the occasion, of delivering the growth promises. Quicker resolution of stressed loans may also give that extra push of ensuring domestic credit expansion. Concomitant policy push in these directions are also necessary. RBI’s efforts in further strengthening the financial institutions, players and products is a welcome move. Setting up the committee to develop alternative benchmark rates is in line with the global trends and should help in appropriate market- linked price discovery for credit.

Above views belong to Soumitra Majumdar, Partner, JSA.