New Delhi: The ongoing transmission of past monetary policy actions would help ease financial conditions, RBI Governor Shaktikanta Das had said during the Monetary Policy Committee meet earlier this month, according to its minutes released on Friday.
The statement assumes significance as past rate cut transmission will provide lower interest rates which, in effect, is expected to trigger consumption and economic revival.
Besides, the Governor said that there exists space for future rate cuts if the inflation evolves in line with the expectations.
“This space needs to be used judiciously to support recovery in growth,” he said.
Das said that monetary policy at this stage has to provide adequate support to ensure a robust revival of the economy from the devastating effects of Covid-19, while at the same time, ensuring that any persistence of elevated inflation does not lead to unanchoring of inflation expectations.
“With the supply side disruptions that are seen to drive the current inflationary pressures likely to be transient and wane out in months ahead as economy normalises, there is merit in looking through the current high levels of inflation and persevere with the accommodative stance for monetary policy as long as necessary to revive growth on a durable basis,” he said.
