Today's Monetary Policy statement underlines confidence in a strong economic recovery

"Today's Monetary Policy statement underlines confidence in a strong economic recovery amidst high geopolitical risks. The raise in the policy rates to 6.5% whilst maintaining a neutral stance by the RBI was a prudent move, especially as the output gap narrows with rising economic momentum. Tighter output gap can stoke core inflation thus pushing overall inflation beyond RBI's comfort range.

Additionally, we also view that the new policy allowing co-origination of loans for priority sector lending by Scheduled Commercial banks and NBFCs as a positive move to further enhance credit availability to small businesses as well as affordable housing. We eagerly await the detailed guidelines.”