New Delhi, June 10 || The RBI monetary policy committee's (MPC) decision to go for a relatively mammoth cut, while changing the stance to neutral, should not be confused with a pause on future rate cuts trajectory in the medium term, but rather a semblance of adopting flexible manoeuvrability on part of a conscious regulator to diligently perform a new troika, a State Bank of India (SBI) Research report said on Tuesday.
The Central Bank aims to manage the yield curve and ensure adequate liquidity in the ecosystem, while renewing the pledge to keep growth sacrosanct, mindful of inflationary concerns and checkmating any bubbles formation, said Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.
“The current focus of RBI is to support the momentum in capital formation for more durable growth,” Dr Ghosh mentioned.
The recent 50 bps cut in repo rate is the first such instance post 2020.
“We have analysed the history of almost 25-year period of jumbo rate actions and found that jumbo reductions are more often than the jumbo rise. A jumbo action is mostly a reaction to a major key event and aftermath (like global financial crisis (GFC), Covid-19, Russia-Ukraine conflict, etc),” the report noted.