Recovering economy not immune to global spillovers: RBI guv

Mumbai : Reserve Bank’s Governor Shaktikanta Das on Wednesday said that India’s economy is on the path of recovery.

In a virtual address post the monetary policy meet, RBI Governor Das said that the Indian economy is relatively well-positioned on the path of recovery.

“But it cannot be immune to global spillovers or to possible surges of infections from new mutations including the Omicron variant.

“Hence, fortifying our macroeconomic fundamentals, making our financial markets and institutions resilient and sound, and putting in place credible and consistent policies will assume the highest priority in these uncertain times,” he said.

Globally, he said economies are opening up and activity levels are reaching pre-pandemic levels.

“At the same time, the recurrence of Covid-19 waves in many parts of the world including the appearance of the Omicron variant, stubborn inflation and headwinds from continuing supply bottlenecks cast a shadow on the outlook.”

“Given the evolving growth-inflation dynamics across countries, monetary policy is also reaching an inflection point, keeping financial markets edgy.”

Besides, Das said that given the slack in the economy and the ongoing catching-up of activity, especially of private consumption, which is still below its pre-pandemic levels, continued policy support is warranted for a durable and broad-based recovery.

On Wednesday, the MPC of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks at 4 per cent.

The reverse repo rate was also kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the ‘Bank Rate’ at 4.25 per cent.