Money9 Edit | The policy stance is the central bank’s confidence in the economy

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The Reserve Bank of India on Wednesday kept key interest rates unchanged at record lows in its first monetary policy announcement this fiscal. It also pegged the inflation at 4.4-5.2% for this fiscal and said there was no plan for another loan moratorium. Shares of auto companies and banks rose sharply after the RBI announcement, indicating that the market was pleased with the policy.

The accommodative stance by the central bank is a good indicator that the economy is stable. The unchanged rates show there is continuity in policy in these uncertain times and India Inc and individuals can take investment decisions based on its forecasts. With stable rates, credit growth needs to take wings to ensure sustainable capital expenditure and spending across all segments of the economy. The growth forecast of 10.5% will encourage economic activity.

The announcement of Rs 1 lakh crore government securities acquisition programme shows its commitment to ensure there is enough liquidity in the system for lending and investment activities.

On the current covid-19 surge, its concerns over the futility of local lockdowns is valid as these do not help in controlling the spread of the virus and undermine the recovery effort of the economy.

The higher balance limit at end of the day from Rs 1 lakh to Rs 2 lakh per individual customers of payments banks will also give a fillip to the payments banks and its customers.