Reserve Bank of India (RBI) will not hesitate to utilize any conventional or non-traditional policy instruments to mitigate the adverse economic effect caused by COVID-19, its guv Shaktikanta Das said, according to the minutes of a monetary policy committee (MPC) meeting that was launched by the reserve bank on April 13.
The six-member MPC, at an out of turn meeting in March recently, decided to lower the policy rate of interest by 75 bps to 4.4%, as the nationwide lockdown brought financial activity to a grinding stop Four of the six members chose a 75 bps rate cut while Chetan Ghate and Pami Dua voted for 50 bps rate cut. Members concurred that a bigger cut was needed to minimise the fall in aggregate need. Mr. Ghate put it: “What is needed remains in the nature of an insurance cut.”
Mr. Das, in no unsure terms, detailed the reserve bank’s resolve to combat the economic fallout of the pandemic. Reserve Bank will continue to stay alert and will not be reluctant to use any instrument– conventional and unconventional– to reduce the impact of COVID-19, restore growth and protect financial stability,” he said.
Worldwide economic downturn
Mr. Das noted that there was a rising possibility of a worldwide economic crisis,