RBI hints at normalising ultra-loose policy, bond yields jump to 6.24%

This was the seventh consecutive occasion when the central bank maintained a status quo on policy rates

The August review of Reserve Bank of India’s bi-monthly monetary policy turned out to be more interesting than expected due to three reasons: a) no unanimous voting on policy stance b) more than expected revision in inflation forecast for FY22 and c) announcement of the variable rate reserve repo auction – an indication that the central bank has started the gradual withdrawal of the ultra-loose monetary policy that was in place since the onset of the Coronavirus (Covid-19) pandemic.

As expected, there was complete unanimity among all the six members of the monetary policy committee (MPC) to keep the interest