MPC Stance 'calibrated tightening' is more like 'calibrated loosening' ; here's why : Article by Dr VP Singh

By VP Singh RBI’s recent standoff with government is ample indication of the stress and complexity building into the economy. The monetary policy in such an environment would quite naturally be a complex one, like the one rolled out last week. The Monetary Policy Committ ee (MPC) has retained ‘calibrated tightening’ stance, but, reduced SLR by 0.25%, to 19%. Further, it says that it would reduce SLR every quarter by 0.25% to reach a level of 18% equivalent to Liquidity Coverage Ratio (LCR). This implies that despite a tigh tening stance, RBI is going to flush liquidity into the system by an amount of Rs 30,000 cr every quarter. In fact, it looks more of ‘calibrated loosening’.

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