Need to do more to rein in yields: MPC
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Last Updated: Apr 23, 2021, 07:05 AM IST
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A debate about the efficacy of the central bank’s guidance appears to be intensifying within the MPC with Governor Shaktikanta Das hesitant to commit himself on a time-bound guidance, while Prof. Jayant Varma declaring it to be ineffective and calling for action by the central bank.
The conduct of monetary policy could be smooth and is firmly in control even if external factors such as rising dollar and a flight of capital happen.
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Mumbai: The resurgence of Covid virus dominated the Monetary Policy Committee deliberations with members worrying that economic recovery could stall leading to them suggesting that the Reserve Bank of India should dip into its arsenal to bring down long-term interest rates as forward guidance has failed to keep a lid on yields.
Resurgence of COVID-19 dominates Monetary Policy Committee deliberations
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A debate about the efficacy of the central bank’s guidance appears to be intensifying within the MPC with Governor Shaktikanta Das hesitant to commit himself on a time-bound guidance while Prof. Jayant Varma declaring it to be ineffective and calling for action by the central bank.
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The resurgence of Covid virus infections dominated the Monetary Policy Committee deliberations with members worrying that economic recovery could stall leading to them suggesting that the Reserve Bank of India should dip into its arsenal to bring down long term interest rates as forward guidance has failed to keep a lid on yields.
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Inside RBI s new plan to fight Covid s second charge
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Last Updated: Apr 07, 2021, 11:14 AM IST
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At today s policy meet, the RBI held the repo rate, its key lending rate, at 4% and kept the reverse repo rate, the borrowing rate, unchanged at 3.35%. The decision comes amid concerns that rising Covid cases could derail the country s nascent economic recovery.
Reuters
RBI has now allowed fintech and payments companies to be a part of the centralised payment systems.
While keeping the benchmark rates on hold at today s policy meeting, the Reserve Bank of India also set out various fresh measures to help the economy fight the second charge of the pandemic.
What is RBI trying to achieve with GSAP, VRRR and all that
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What is RBI trying to achieve with GSAP, VRRR and all thatBy Suyash Choudhary, ET CONTRIBUTORS
Last Updated: Apr 07, 2021, 04:26 PM IST
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It is well-understood that the current level of overnight rates is too low and, thus, has limited shelf-life.
Agencies
The yield curve is expected to start losing some of its steepness, writes Suyash Choudhary.
The RBI/MPC kept policy rates on hold on Wednesday as was widely expected. The “time based” guidance (accommodative into next financial year) was dropped, while the “state-based” guidance was reaffirmed (accommodative stance till prospects for a sustained recovery are well secured). Again this was the most likely anticipated outcome in terms of guidance, given that the RBI/MPC may not have wanted to tie themselves into a time commitment in what is an exceedingly complex and uncertain global economic framework.