After the budget, now the RBI's review meeting has decided

Mumbai, Ta. 02 February 2021, Tuesday

With Finance Minister Nirmala Sitaram announcing the setting up of a special bad bank in the budget to empower the country's public sector banks, it remains to be seen what role the Reserve Bank of India will play for banks. A meeting of the Reserve Bank's Monetary Policy Committee to review monetary policy is set to begin here tomorrow.

One analyst said the RBI would not only maintain its accommodative stance but also make no change in interest rates in view of the budget concessions provided by the finance minister.

The recent decline in inflation has been due to the fall in food prices. Major inflation has not gone down yet. The 9-member MPC meeting will be held from February 4 to 6. The decision of the meeting will be announced on the fifth.

The Reserve Bank had earlier cut key interest rates in May last year. Since February last year, the RBI has cut the repo rate by 114 basis points. Even though retail inflation has come down, its volume is still high. Economic growth needs monetary policy support, which is why the RBI has maintained an accommodative stance, another analyst said.