RBI can pare excess liquidity even if stance is accommodative: Ashima Goyal

In a Q&A, Goyal, a member of RBI's Monetary Policy Committee, says reducing excess liquidity is at RBI's discretion and MPC members can only offer advice

Ashima Goyal, a member of the Reserve Bank of India’s Monetary Policy Committee voted in favour of keeping the repo rate unchanged and maintaining an accommodative stance during the August monetary policy review. In an interview to Business Standard, Goyal, who is a professor at the Indira Gandhi Institute of Development Research (IGIDR), says reducing excess liquidity is a discretion of the RBI and MPC members can only offer advice. Edited excerpts:

Q. You have used the phrase “whenever normalisation starts,” indicating it has not started yet, though a section of the market believes that it did with the VRRR