Rollback of policies could derail growth

Mumbai: RBI Governor Shaktikanta Das voted for status quo at the last bi-monthly monetary policy review arguing that premature rollback of policies undertaken to mitigate the impact of the pandemic would be detrimental to nascent growth and recovery, minutes of the meeting showed on Friday.

All members of the Monetary Policy Committee (MPC) - Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra and Shaktikanta Das - had voted for maintaining status quo in the policy review announced on December 4.

Overall, the persistence of inflation at elevated levels constrains monetary policy at the current juncture. At the same time, though recovery is underway, there is still continuous need to nurture and support growth to make it broad based and durable.

"A premature roll back of the monetary and liquidity policies of RBI would be detrimental to the nascent recovery and growth," Das said, according to the minutes of the meeting released by the central bank. After the three-day meeting (December 2 to 4) of the MPC, the RBI had kept the policy rate unchanged at 4 per cent citing high inflation.

As per the minutes, the Governor said the Reserve Bank will continue to respond to global spillovers to secure domestic stability with its liquidity management operations. The various instruments at RBI's command will be used at the appropriate time, calibrating them to ensure that ample liquidity is available in the system, he added.

RBI Deputy Governor Patra noted that with growth gaining cyclical momentum, the window available to the MPC to look through inflation pressures is narrower than before.