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RBI shifts gaze to inflation from growth after 2 years

April 11, 2022

RBI shifts gaze to inflation from growth after 2 years
The increase in pump prices of petroleum and diesel by a steep ₹10 in the fortnight following surging crude oil prices over $100 a barrel has been the factor in the Reserve Bank of India (RBI) turning its attention to inflation over growth, which was its focus since the pandemic came in March 2020.

The central bank on Friday indicated it was preparing to withdraw the accommodative position, sending bond yields a three-year high. The six-member Monetary Policy Committee (MPC) unanimously voted to keep the policy rate, or the repo rate, unaltered at 4%. The accommodative position also was unaltered, however with a caveat. The central bank said it
would focus on withdrawing from it.
 
“The MPC decided unanimously to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation stays within the target going forward while supporting growth,” RBI Governor Shaktikanta Das said in a departure from his previous comments more than two years that the accommodative position would be kept up with “as long as necessary to revive and sustain growth on a durable basis and keep on mitigate the impact of Covid-19 on the economy”.
 
This change of language likely guaranteed every one of the individuals voted for this goal. One of the external members, Jayanth Varma, had voted against the position in the last four policies.
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