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The RBI holds steady on policy rates, defers policy normalization on rising global uncertainty

  • 8 Dec 2021
  • Post Views: 4070

The RBI policy announcement today indicated a very dovish leaning. As expected, it decided to keep the repo rate and the accommodative stance unchanged, reiterating the need to support a durable economic recovery. However, it held off its first move towards policy normalisation as it kept the reverse repo rate unchanged (against our expectations of a 10-20 bps hike), citing increasing global headwinds – accentuated by the Omicron variant. Meanwhile, it continued on its path of liquidity normalisation in a calibrated manner, laying the groundwork for the start of policy normalization, which is now expected to happen in Feb ’22, subject to a continued controlled COVID situation.

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