MPC to focus on growth, expectation on rate cut back on table

KOLKATA: Expectation of the Reserve Bank of India returning to the interest rate easing cycle sooner gained traction with it saying that the Monetary Policy Committee (MPC) would focus on economic revival when the transient spikes in inflation dissipate. The regulator projected that inflation would ease closer to the target by March next year.

Governor Shaktikanta Das said that the rise in prices is due to supply side shocks as the effect of lockdowns and restrictions in movements across the country.

“As supply chains are restored, these wedges should dissipate,” Das said in his policy statement. “The MPC has hence decided to look through the current inflation hump as transient and address the more urgent need to revive growth and mitigate the impact of COVID-19.”

This has provided the space for continuing with the accommodative stance with forward guidance as set out in the MPC’s resolution.

“We continue to expect

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