Eleventh EGROW Shadow MPC Meeting on 31st July
- Pandemic represents a unique Supply cum Demand Shock
- Monetary (credit & liquidity) policy has to focus on financial stability
- Inflation is high, mainly on account of food, and could be temporary
- Focus on Transmission of interest rates and credit delivery
- Recovery needs a counter-cyclical rise in credit growth.
- NBFC sector needs serious attention.
- Widen corridor between Repo and Reverse Repo rate
- Extend HTM to banks to incentivize them to invest surplus money market liquidity without fearing MTM hits.
- Monetary Policy should prepare to accomodate fiscal policy
- Need to relax Basel Norms as it could restrict credit flow to markets/industry
Recommendation of EGROW Shadow MPC
Reduction in Repo Rate
EGROW Shadow MPC Members
1 - 50 bp in August + 50 bp in October
1 - 25 bp in August
1 - 25 bp in August + 75 later in the year
3 - Pause
Guest Panelist from ASSOCHAM
1 – 50 bp in August
Widening the corridor between Repo and Reverse Repo
2 – Members of EGROW Shadow MPC
Time will Tell
By Surjit S Bhalla and Arvind Virmani