View on Monetary Policy by Sudhakar Shanbhag, CIO, Kotak Life Insurance Ltd.

All 6 MPC Members voted to hold rates at 5.15%, in line with market expectations. The committee recognizes that there is policy space available for future action. The path of inflation is, however, elevated and on a rising trajectory through Q4:2019-20. The MPC decided to persevere with the accommodative stance as long as necessary to revive growth, while ensuring that inflation remains within the target.

The RBI also announced some measures to boost the real estate sector. To boost consumer home and auto loans, for the next six months, banks will be will be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans from their net demand and time liabilities (NDTL) for maintenance of cash reserve ratio.