The Reserve Bank of India, which happens to be India’s central bank responsible for the issuing and supplying of the Indian rupee and acts as a guidance system that regulates the Indian Banking Systems. The RBI’s fourth bi-monthly monetary policy is to hold the line on interest rates
As the Q2 GDP numbers decrease to a much lower number in the current economy, and the retail inflation becomes uncomfortably high, The Reserve Bank of India’s (RBI) monetary policy is not expected to make any changes to its interest rates, as of Friday. This decision was made at the MPC meeting that ended on Friday.
Economists all over India expect RBI to announce some successful measures that will help increase market rates through operations such as liquidity absorption operations.
This strategy by the RBI will definitely intervene in the bond markets in order to protect the long-term yielding bonds to rise.
According to Gaurav Garg, who is the Head of Research, Capital Via Global Research Limited, analyzed the current scenario and commented that the RBI might rest their decision in order to continue with the status quo. He further went on to say that RBI would not consider making any changes at the moment with the GDP growth being in the negatives for the past two quarters. Therefore, according to him, in the eyes of the RBI, growth would take precedence over inflation.
Currently, the RBI has a lot on its plate as everyone is looking to it to send some guidance during this difficult year, with coronavirus creating havoc. Before making any changes, the RBI has to focus itself on increasing the growth of our economy which has reached a dismal condition. Earlier, the meeting at the MPC was also delayed due to the appointment of new panel members.