Ms. Rajni Thakur, Economist, RBL Bank on today's RBI's monetary policy announcement

"RBI continues on its fine balancing act in its monetary policy decisions, despite several headwinds. While the MPC decisions were on the expected lines, Central Bank has managed to communicate its continued support after the intense second wave of the pandemic. Credit support to the economy remains agile and pro-active, with on tap liquidity facility for contact intensive sectors that are worst hit in the second wave, tweak in coverage of one-time restructuring scheme to increase the maximum exposure limit and another liquidity facility for SIDBI for on-lending and refinancing.

Bond market support continues as well with explicit support to SDLs in the G-SAP operation and announcement of 1.20 lakh crore worth sovereign bond purchases under G-SAP 2.0. With an eye on liquidity mismatches among various sections, there was also a mention of RBI focus shifting towards equitable liquidity distribution in coming months. There are thus ample signals that rates will stay lower till growth revival is broad based and sustainable. We thus expect monetary policy to stay accommodative for the whole fiscal year and any normalization signals to come forward only in the next year."

Source : Equity Bulls

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