MUMBAI: The monetary policy committee (MPC) of the central bank is unlikely to change policy rates in August, opting to keep the repo rate at 4% and the policy corridor unchanged, said Radhika Rao, senior economist at DBS. Forward guidance will favour a continuation of the accommodative policy stance to guard against growth risks, especially the third covid-19 wave. The accompanying commentary will heed inflation risks through close monitoring and refrain from tweaking the policy levers, for now, Rao said in a note on Friday. “The preference to gradually draw out excess liquidity might increase the sizes of variable reverse repo rate auctions while reaffirming support for the ongoing G-SAP program. The impact of a variable rate reverse repo (VRRR) increase might be marginal given the scale of surplus liquidity estimated at ₹7.5-8 trillion in bank liquidity plus government cash balances," said Rao.

Source: Mint July 31, 2021 03:56 UTC