Shaktikanta Das, governor of the Reserve Bank of India (RBI), emphasized continued policy support despite growing concerns over the Omicron variant of the coronavirus pandemic, echoed by members of the bank’s monetary policy committee (MPC) during their meeting earlier this month to call on key lending rates.
According to the minutes of the MPC meeting, which was held between December 6 and 8, 2021, Mr Das said uncertainty is the only certainty amid the increasing cases of Omicron variants in the country and its potential impact on the economy. .
All MPC members had unanimously decided to leave the repo and reverse repo rates unchanged after the three-day deliberation held at the RBI office in Mumbai.
Speaking at the meeting, the RBI governor said the risks stalking the global economy have increased with the rapid spread of the virus mutations, including the Omicron variant, causing countries to look for restrictions.
These developments, he said, certainly have two important points for central bankers.
“First, uncertainty emerges as the only certainty that central bankers will face in the coming period. is going to be more challenging,” he noted according to the minutes.
The Indian economy is facing several headwinds stemming from global factors — some old ones are getting longer compared to the initial assessment, coupled with new ones, he noted.
He went on to say that there is growing uncertainty about the evolving global macroeconomic outlook. On the domestic front, while the outlook for economic activity is improving, there is still some slack with key drivers such as private consumption remaining well below their prepandemic levels, Mr Das added.
“Given these uncertainties, continued policy support is warranted for a sustainable, broad-based and self-sustainable recovery, especially to fuel a rebound in sectors that are lagging and to protect those exposed to evolving headwinds,” the governor said.
All members of the MPC – Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Mridul K Saggar, Michael Debabrata Patra and Shaktikanta Das – had unanimously voted to leave the policy repo rate unchanged at 4 percent.
All members except Mr Varma also voted to continue the accommodative stance for as long as necessary to revive and support growth on a sustainable basis and continue to mitigate the impact of the coronavirus pandemic on the economy, while ensuring that inflation continues to progress within the target range.
Mr Varma has entered a reservation on this part of the resolution.