India’s economic growth momentum needs to strengthen further for sustained recovery, reiterated Reserve Bank of India Governor Shaktikanta Das during the monetary policy committee (MPC) meeting.
According to the minutes of the meeting released on Monday, “Growth is recovering and gathering momentum. The outlook has improved significantly with the rollout of the vaccine programme in the country. The growth momentum, however, needs to strengthen further for a sustained revival of the economy. For a quick return of the level of output to the pre-COVID trajectory,” he added in the MPC.
Earlier, RBI had left policy rates as it is but there still was a possibility for a calibrated normalization of some of the crisis-time measures after the COVID-19. This was to gradually wean the economy off excess liquidity.
“Core inflation remains stubborn and requires close monitoring. It has the potential to render the recent fortuitous improvements in the macroeconomic outlook stillborn. Rising international commodity prices are important here, he added.
He also spoke of rising concerns about financial stability during the MPC. Monetary policy will have to lean against the wind to keep interest rates low for now.
If OMO purchases are moderate, it comes with the risk of crowding out of a private investment.