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'RBI's move will aid GDP recovery'

MPC's pronouncement on continuing the accommodative stance for as long as needed and observation of an improving recovery path will give comfort to markets

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‘RBIs move will aid GDP recovery’
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4 Dec 2020 9:37 PM IST

New Delhi: India Inc and experts on Friday said the RBI's decision to hold interest rates will support economic recovery in the aftermath of the Covid-19 pandemic and that they expect the central bank to maintain an accommodative stance in the near future.

The Reserve Bank of India (RBI) on Friday left interest rates unchanged for a third straight meeting as inflation stayed stubbornly high, and said the economy was recuperating fast and would return to positive growth in the current quarter itself. The benchmark repurchase rate will be maintained at 4 per cent, RBI Governor Shaktikanta Das said. The six-member Monetary Policy Committee (MPC) retained its accommodative stance, signalling its intentions to cut interest rates whenever the situation eases. A spike in consumer prices forced RBI to pause after cutting rates by 115 basis points this year.

However, we must applaud the MPC for staying on course with regard to accommodative interest rate stance," Assocham Secretary General Deepak Sood said. The growth projections by RBI, such as positive growth in second half of FY2021 and revised real GDP contraction at 7.5 per cent, are inspiring and will build confidence in the economic and business activities going forward, PHDCCI President Sanjay Aggarwal said. "Going ahead, we expect accommodative stance to continue at least in next financial year and there is further cut in repo rate if inflation comes down," he added.

Nitin Sharma, Director Research Fidelity International India said the MPC's pronouncement on continuing the accommodative stance for as long as needed and observation of an improving recovery path will give comfort to markets. Ashish Shanker, Deputy MD and Head of Investment, Motilal Oswal Private Wealth Management said an accommodative liquidity stance will ensure access to liquidity will not be a challenge and the ongoing recovery continues to gather steam.

Ramesh Nair, CEO & Country Head (India), JLL, said the RBI's decision augurs well for the economy. Mayur Dwivedi, Head- Strategy, M&A, Investors Relations at Religare Enterprises, said the RBI's decision underlines the central bank's focus on reviving growth in the aftermath of Covid-19 pandemic.(PTI)

Monetary Policy Committee Reserve Bank of India Covid-19 pandemic 
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