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The RBI continues to prioritize growth revival despite inflationary pressures

  • 6 Aug 2021
  • Post Views: 3062

The RBI MPC maintained status quo on key policy rates and its accommodative stance. The central bank continued to prioritize growth revival over building inflationary concerns. It perceived the recovery as nascent and in need of continued policy support while rising inflation was seen as temporary and primarily supply-driven. On liquidity management, the RBI announced an increase in the variable rate reverse repo (VRRR) auction amount to absorb the excess liquidity, which the governor managed to separate from being read as a move towards policy normalisation. In response to the second COVID wave, the RBI also extended previous measures such as the on-tap TLTRO scheme for stressed sectors, relaxation on a marginal standing facility to banks, and the deferral of the deadline for achieving financial parameters under the resolution framework 1.0.

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