RBI must continue monetary easing policy, says IMF official

The Reserve Bank of India (RBI) will have to continue its accommodative monetary stance as COVID-19 cases are on the rise in India and economic recovery would be slow going forward, a senior official at the International Monetary Fund (IMF) said.

“There is scope for further easing [of policy rates] and additional measures [by the RBI],” said Ranil Salgado, assistant director, Asia Pacific, IMF, in a webinar.

He said the RBI had adopted an accommodative monetary policy stance amid limited fiscal space.

Since March, the RBI had lowered the repo rate by 115 basis points and reverse repo by 145 bps boosting liquidity, he said, adding additional measures were focused on increasing liquidity in parts of the financial system with largest needs, easing public financing and financial sector balance sheet pressures.

He said recent structural reforms undertaken by the government would support medium-term growth. But more efforts were needed with respect to land, labour and trade.

Observing that the sharp rise in COVID-19 cases despite lockdowns was of concern, he said the pandemic could worsen a credit crunch and India needed to address corporate sector vulnerability.

Changyong Rhee, director Asia and Pacific, IMF, said as per IMF’s June World Economic Outlook, the Asia Pacific region would experience a protracted recovery. On the outlook for Asia, he said: “There will be deeper contraction and a protracted recovery as against the forecast made in April”.

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Printable version | Jun 22, 2021 8:29:49 PM |

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