The August review of the Reserve Bank of India’s bi-monthly monetary policy was interesting as:
1.) no unanimous voting on the policy stance
2.) more than expected revision in inflation forecast for FY22 and
3.) 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 Covid-19 pandemic.
As expected, there was complete unanimity among all the six members of the monetary policy committee (MPC) to keep the interest rate unchanged at 4%. However, on maintaining the accommodative stance, five of the six members voted in favour. Professor Jayanth Verma disagreed.
Read more