Monetary Policy View (April, 2021) by G Murlidhar, MD & CEO, Kotak Mahindra Life Insurance

 “The Reserve Bank of India (RBI) has assured markets of continuation of its accommodative, growth-supportive stance till growth trajectory is on a firm footing. The monetary policy committee (MPC) sees upside risks to inflation driven by higher commodity prices balanced by downside inflation risks due to Covid’s second wave. To moderate the large systemic liquidity surplus, RBI has decided to conduct longer tenor variable rate reverse repo operations. Additionally, in order to ensure orderly evolution of yield curve, RBI has announced a secondary market bond purchase of Rs. one lakh crore during the first quarter of FY22. We expect, given the high uncertainty around near term growth prospects, MPC will remain accommodative at least through the first half of FY22.”