View on RBI Monetary Policy - Feb 2021 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

Accommodative Policy keeping Economic Growth in mind - Expect Rates to be Stable with an Upward Bias

In line with market expectations, the Monetary Policy Committee voted unanimously to keep key rates unchanged. The stance continued to be accommodative as long as it is necessary to support growth as the economy comes out of the pandemic.

High frequency data shows the economy recovering across sectors. GDP growth for FY21-22 has been pegged at 10.5%. CPI inflation has been projected lower at 5.2% this quarter (5.8% earlier) and at 5 to 5.2% for H1. RBI assured adequate liquidity to ensure that government borrowing is completed in a "non-disruptive" manner.

A slew of positive measures were announced including allowing individuals to open accounts with RBI for Gilt purchases.

Coming after a growth-oriented budget, the monetary policy stance augurs well for economic growth. Expect rates to be stable with an upward bias depending on inflation trajectory.

Source : Equity Bulls

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