‘Growth momentum needs to be strengthened’

The growth momentum needs to be strengthened for a sustained revival of the economy and a quick return to the pre-COVID trajectory, RBI Governor Shaktikanta Das said, pitching for a status quo on rates, at the last meeting of the Monetary Policy Committee (MPC).

All the six members of the MPC had voted for keeping the policy repo rate unchanged at 4% at the three-day meeting which began on February 3, citing similar reasons.

Mr. Das, according to the minutes of the meeting released by the central bank on Monday, had said: “Growth, although uneven, is recovering and gathering momentum, and the outlook has improved significantly with the roll-out of the vaccine programme in the country.”

“The growth momentum, however, needs to strengthen further for a sustained revival of the economy and for a quick return of the level of output to the pre-COVID trajectory,” he added.

Given the sharp moderation in inflation along with a stable near-term outlook, he said, the monetary policy needed to continue with the accommodative stance to ensure that the recovery gained greater traction and became broad-based.

The RBI kept the policy rate unchanged for the third time in a row in its last monetary policy review for 2020-21 on February 5.

The MPC also decided to continue with the accommodative stance as long as necessary.

MPC member Shashanka Bhide, in his statement, said the committee was committed to continuing with the accommodative stance as long as was necessary — at least during the current financial year and into the next fiscal.

Deputy Governor Michael Patra said overall, the near-term outlook for inflation appeared less risky than the near-term challenges for growth which warrant continuing policy support.