Risks beyond growth

RBI should not undermine the price and financial stability objectives

As expected, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has unanimously decided to leave the policy repo rate unchanged. It also decided to maintain an accommodative stance to support growth. The risk to economic recovery has increased significantly over the last few weeks owing to a rapid surge in Covid-19 cases. Restrictions being imposed by various states to contain the spread will affect demand. In the given context, the RBI has done well to maintain the status quo. However, the policy path may not remain as straightforward in the coming quarters. The surge in Covid