RBI Policy: Subtle shift in growth-inflation balance

We foresee hikes of 25 bps each in the repo and reverse repo rates each in the April 2022 and June 2022 reviews

The December 2021 monetary policy review threw up no major surprises. With the fresh uncertainty engendered by the Omicron variant, the Monetary Policy Committee (MPC) expectedly maintained status quo on the rates and stance. Even the number of dissents to maintaining the stance as accommodative remained stable at one vote out of the six MPC members. While keeping the reverse repo rate unchanged, the Reserve Bank of India (RBI) emphasised the objective to re-establish the 14-day variable rate reverse repo auction as the chief liquidity management operation.

The annual GDP and inflation forecasts for FY2022 were kept unchanged at the October