InvestorQ : What were the key announcements made by the RBI in its monetary policy report?
Arya Nanda made post

What were the key announcements made by the RBI in its monetary policy report?

Answer
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Deepa Salunkhe answered.
5 months ago


Here are some of the key outlook points made by the RBI in its monetary policy report in the aftermath of the pandemic.

· The outlook for growth has changed drastically according the RBI report. Earlier, the RBI had cited factor like bumper Rabi harvest, improving transmission of past reductions and the cut in corporate tax rates as possible reasons for possible growth. However, that narrative has largely changed after the COVID-19 as per the RBI.

· RBI has warned of the R word and said that the global economy is expected to slump into recession in 2020, as post-COVID projections indicate. Clearly, this was likely to hit Indian growth too, even as the lockdown uncertainty continues.

· Late in march 2020, the RBI had cut repo rates by 75 basis points to its lowest historical level but any impact would only be visible once production and economic activity returns to normal levels. The lag may remain.

· On an optimistic note, the RBI is positive on two fronts. Firstly, the consistent injection of liquidity will calm bond markets and stabilize rupee markets. Also, RBI has pointed out that weak oil prices will result in positive terms of trade for India.

Overall, RBI tone is cautious but is laced with optimism.