RBI likely to maintain ‘accommodative’ stance in ongoing policy review: Assocham

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December 3, 2020 6:36 PM

It also said that the accommodative stance would reflect the RBI's commitment to keep the lending rates benign to support growth, hit by the COVID-19 pandemic.

At the same time, the financial stability and the bank balance sheets have been strengthened, he added.At the same time, the financial stability and the bank balance sheets have been strengthened, he added.

The Reserve Bank of India’s (RBI) key focus in the ongoing policy review meeting is likely to be on “ensuring adequate liquidity” in the system while maintaining an “accommodative” stance, industry body Assocham on Thursday said.

It also said that the accommodative stance would reflect the RBI’s commitment to keep the lending rates benign to support growth, hit by the COVID-19 pandemic.

“Focus of the bi-monthly review of the credit policy by the RBI monetary policy committee is expected to be ensuring adequate liquidity into the system, retaining the policy stance as accommodative,” Assocham said.

The RBI has done a commendable job in handling the situation arising out of the pandemic, it said. It has reached out to a number of sectors like mutual funds, realty, NBFCs and MSMEs, besides the all-encompassing moratorium on loan repayments, Assocham Secretary General Deepak Sood said in a statement.

At the same time, the financial stability and the bank balance sheets have been strengthened, he added.

As RBI Governor Shaktikanta Das unveils the decision of the RBI-MPC on Friday, the challenges of striking a balance between increased and continuous requirement of high liquidity, and taming retail inflation would be shared, said the industry body.

“In our assessment the current inflation should be a temporary phenomenon and would ease as supply disruptions resulting from COVID-19 related restrictions are getting resolved,” Sood said.

He also said: “While the cut in repo rate may not be announced on Friday, the accommodative stance should assure the industry and the market participants about the RBI’s commitment to keep the lending rates benign to give a continuous support to growth, especially in the post-Covid period.”

The three-day RBI bi-monthly policy is on since Wednesday and the outcome of the six-member MPC headed by the governor will be known on Friday. In its preceding policy meet in October, the Reserve Bank had kept the key repo rate unchanged in view of heightened retail inflation which has persistently remained above its comfort level.

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