Expect hard decisions at RBI MPC, 6-8 Apr’22
In the first Monetary Policy Committee of 2022-23, the spotlight will be on measures to curb inflation while fueling growth in a rapidly uncertain world economy
Will India remain unscathed? For how long?
The Reserve Bank of India has announced the Monetary Policy Committee will meet six times in 2022-23, with the first one slated during 6-8 April 2022.
Coming amid the Russia-Ukraine war and consequent high inflation around the world, the vital task of the MPC will be to walk on the tightrope between the much-anticipated post-Covid growth and rising uncertainty in the global economy.
Several countries (Sri Lanka, Sudan, Pakistan, etc) are facing their worst economic crises ever, while the world is silently preparing for a possible expansion of the war between Russia and Ukraine. India is also staring at record-high inflation with soaring oil prices and the conclusion of state/local body elections.
This is a double-whammy for companies looking for government incentives to grow after more than two years of turmoil due to Covid. In case the MPC signals further compromise on growth, it could cascade into a downward spiral for the economy and kill local businesses – a recession worse than 2008-09.
| Scheduled MPC meetings for 2022-23 |
| 6-8 Apr 2022 |
| 6-8 Jun 2022 |
| 2-4 Aug 2022 |
| 28-30 Sep 2022 |
| 5-7 Dec 2022 |
| 6-8 Feb 2023 |
RBI Governor Shaktikanta Das had recently hinted that monetary and financial stability will remain the top focus of the bank. However, he admitted the challenges are huge this time. “The current global conditions, after about two years of living through the pandemic, are now posing complex challenges for central bank communication. A number of economies, including the major ones, are facing multi-decadal high inflation due to supply disruptions, tighter labour markets, fragility of the just in time inventory management and geo-political disturbances,” he said.
Das summed up the importance of policies amid such external and internal challenges. “Central banks are in a bind – if they act aggressively to contain inflation which may perhaps subside as normalcy returns, they run the risk of setting in recession; on the other hand, if they act too little and too late, they may be blamed for ‘falling behind the curve’ and may have to do a lot of catching up later which will be detrimental to growth”.
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