Inflationary infliction: MPC to hold rates, accommodative stance

| | Mumbai
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Inflationary infliction: MPC to hold rates, accommodative stance

Wednesday, 07 April 2021 | Agencies | Mumbai

The Reserve Bank is expected to retain key lending rates on the back of inflationary pressure along with high bond yields during the first monetary policy review of FY22, experts contended.

Similarly, RBI's monetary policy committee (MPC) is likely to maintain the current accommodative stance due to growth concerns amidst resurgence of Covid-19.In a poll conducted by IANS, economists and industry experts cited rising inflation as a key factor halting any further monetary policy easing.”No change is expected in policy rate. Status quo is expected for the next 6-9 months,” Sunil Kumar Sinha, Principal Economist, India Ratings & Research, told IANS.

“OMOs will also continue to stabilise the yields which have gone up after the government announced additional borrowing of Rs 800 in FY21.”

Notably, the country's CPI based inflation rose to 5 per cent YoY in February from 4.1 per cent in January.

Likewise, food and beverage price growth gained 4.3 per cent from 2.7 per cent in January.The core CPI excluding food, fuel and light was up 5.6 per cent in February, from 5.3 per cent in January.”MPC in its upcoming meeting will continue to reaffirm the accommodative monetary policy despite the global increase in bond yields amidst concerns of a quicker than expected normalisation in the markets of developed economies,” said Suman Chowdhury, Chief Analytical Officer at Acuite Ratings and Research.

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