RBI monetary policy: MPC goes for normalisation by stealth

It is difficult to predict whether we will see a reverse repo rate hike in February or whether it will be held over until April

There was no surprise in the outcome of the three-day meeting of the monetary policy committee (MPC) of India’s central bank — one that ended on Wednesday — the last before the Union Budget for the next fiscal year.

The policy rates remain unchanged and the stance stays accommodative even though Reserve Bank of India (RBI) Governor Shaktikanta Das said that India is “better prepared to deal with the invisible enemy COVID-19” and “in several sectors of the economy, pre-pandemic levels of output have been crossed”. The repo rate, at which the RBI infuses liquidity, remains 4 per cent and