Monetary Policy Review - RBI Maintains Accommodative Stance, Widens Liquidity Support: Systematix

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Systematix Research Report

In its Monetary Policy Committee review, the Reserve Bank of India reiterated its stance of prioritizing growth and maintaining stable financial conditions despite elevated inflation risks.

The government security acquisition programme operations worth Rs 600 billion conducted in two tranches thus far in FY22 have ensured orderly evolution of the government securities curve.

By announcing G-SAP 2.0 worth Rs 1.2 trillion, RBI has maintained its focus on keeping the yields low.

Additionally, it has widened its liquidity support to contact-intensive sectors.

With growth taking precedence, we expect RBI to remain fairly accommodative and keep its key policy rates unchanged for FY22.

Liquidity and yield curve management will likely be the focus in the current fiscal year.

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