The RBI has rightly prioritized growth over inflation to rejuvenate economic growth on a durable basis and mitigate the extraordinary impact of Covid 19. The decision of keeping the repo rate unchanged along with maintenance of accommodative stance is on expected lines as low interest rates are critical to economic revival.
Additional liquidity measures through extension of deadline of On tap TLTRO scheme till December 31, 2020 will have positive implications for stressed sectors like retail, MSME and real estate.. Amendment of guidelines related to export credit in foreign currency and restructuring of Derivative contracts is a much needed move to ensure smooth transition from LIBOR and meeting the incipient challenges. Deferral for achievement of financial parameters under Resolution framework 2.0 will address the revival difficulties faced by the businesses in meeting the operational parameters.
Attributing inflation risks to temporary supply shocks, MPC has also indicated that it will anchor inflation expectations as soon as strong and sustainable growth is assured.
