MPC likely to leave GDP growth projections unchanged for FY22

by Nidhi Bhati

The Monetary Policy Committee (MPC) is likely to keep policy rates on hold, maintain its accommodative stance going into 2021-22 and sound dovish amid rising Covid-19 cases, according to Anubhuti Sahay, Head, South Asia, Economics Research, Standard Chartered Bank. She also expects the MPC to leave India’s GDP growth projection for 2021-22 unchanged at 10.5 per cent. Headline CPI inflation is expected to average higher than five per cent in during April-September 2021, higher than MPC’s comfort threshold of four per cent but in line with its projections provided in the February MPC meeting. Sahay also believes that policy normalisation is unlikely to play out before December 2021. By then, policy makers would have a clearer picture on vaccine effectiveness for a reasonable percentage of the adult population, she added.