Key highlights of the RBI policy and guidelines:
The Reserve Bank of India has been reluctant to start prioritizing price pressure control after raising its inflation forecast even as it downgraded its growth outlook and left interest rates unchanged on Friday.
Here are the key highlights of the RBI Policy and Guidelines:
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RBI Governor Shaktikanta Das on Friday hinted at an end to the accommodative policy stance that began three years ago, citing increased uncertainties arising from the Ukraine war and as a result rising prices.
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Addressing the media for the first time since the February 2020 monetary policy review at Mint Road headquarters, Mr Das said the timing is right to put inflation ahead of growth in policy priorities. currency. This is a change after three years, and the same is reflected in the upward revision of the inflation forecast for the current year.
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“In order of preference, we have put inflation ahead of growth, as in the past three years,” Mr. Das said.
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Crude oil prices fluctuate daily. Therefore, the situation is volatile; therefore, the central bank will monitor the ongoing situation. He said that all action will depend on how things play out in the coming months.
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In front of the press, RBI-MPC (Monetary Policy Committee voted to leave key policy rates unchanged and maintain accommodative policy stance, even as it raises inflation forecasts to 5.7% for the year, well above the 4.5% expected in the February policy review.
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The central bank cut its economic growth forecast to 7.2% for the current fiscal from 7.8%, previously estimated, amid volatile crude oil prices and supply chain disruptions caused by the Russian-Ukrainian war is going on.
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Commenting on the geopolitical situation, the central bank chief said it is a dynamic and rapidly changing situation, and all actions will be adjusted accordingly.
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The governor blamed the bullish outlook on the outlook mainly on the ongoing Ukraine war and its impact on crude oil, cooking oil and other key commodities.
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Mr. Das said while referring to the Russia-Ukraine war, which began on February 24, just days after the previous meeting of the RBI’s Monetary Policy Committee, “From February to present, the change has been Tectonics happened across the globe.
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He said that the substantial inflation forecast has been revised upward mainly due to crude oil’s rise above the $100/barrel mark. However, RBI insists that it will use all available tools to protect the Indian economy.
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However, Mr. Das said the central bank will not do anything that goes against the spirit of global sanctions against Moscow when asked about the rising rupee-rupee trade, ahead of the sanctions. tough sanctions on Russia, after the invasion of Ukraine.
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Das said the RBI will continue to adopt a nuanced, agile approach to liquidity management while ensuring adequate liquidity in the system, Mr. Das said, referring to the pandemic situation and other challenges. central bank efforts.
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He said, “now, two years later, as we are coming out of the pandemic, the global economy has seen tectonic shifts starting on 24 February, with the onset of war in Europe, followed by sanctions and escalating geopolitical tensions.”
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“Once again, we in the RBI are resolute and ready to defend the economy and ride out the current storm,” he added.
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As for cardless withdrawals, the governor said they were introduced to cut down on skimming. The issuance of credit and debit cards will continue as they have many uses beyond withdrawing money from ATMs.
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Seeking to facilitate a higher flow of credit on individual home loans, the RBI on Friday extended its affordable home loan quota for another year through March 31, 2023. “This will facilitate a higher flow of credit for individual home loans,” Mr. Das said.
