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Below is quote on RBI announcement by Mr. Jyoti Roy - DVP- Equity Strategist, Angel Broking Ltd

The RBI in its latest MPC meeting voted unanimously to keep the policy repo rate unchanged at 4 per cent. The Reverse repo and the MSF rate also stand unchanged 3.35% and 4.25% respectively. The MPC also decided on a 5 to 1 majority to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy. The MPC took cognizance of the fact that the last two inflation readings for May and June at 6.3% were well above higher end of the RBIs comfort zone 6.0% Moreover the RBI has observed that inflationary pressures are exogenous and largely temporary due to supply shocks. We expect the RBI will continue to maintain their accommodative monetary policy given that the high inflation levels are transitory in nature and should start coming off in the second half of the year. Moreover the recovery from the second Covid wave is still nascent and needs to be nurtured and we expect the RBI will continue to use all tools available including OMOs, G-SAP, TLTRO, operation twist etc. to ensure that longer term interest rates are well anchored and there is adequate credit flows to the most stressed sectors.

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