Industry Reaction on RBI's Monetary Policy of August 2021

Earlier today, RBI Governor Shaktikanta Das unleashed the Monetary Policy of this month in which the repo rate remained unchanged at 4% for the 7th consecutive time with the accommodative stance as long as necessary to support growth​.

Coming in support of this, Prithviraj Srinivas, Chief Economist, Axis Capital said, “The MPC has kept policy rates on hold as expected. The only major move was an increase in Variable Rate Reverse Repo (VRRR) limits which was widely expected. However, the governor was quick to point out that VRRR limit increase does not indicate a change in monetary policy stance. We expect the timing of first policy rate increase in the future to coincide with confidence that vaccinations provide adequate protection against relapse.”

The Reserve Bank of India’s (RBI) Monetary Policy Committee decided to keep MPC rates unchanged for the seventh time straight and continued with an accommodative stance, citing the need to support ongoing growth recovery amid continued uncertainty and global financial market volatility. at its bi-monthly policy.

The announcement came after a three-day meeting of its Monetary Policy Committee (MPC). The central bank has cut policy rates by 115 basis points since February 2020.