Uncertainty of the interest rates in FY22

The announcement to be made on April 7 regarding the result of rates discussed in the first committee of FY22.  The estimates regarding the inflation rate and growth level incline towards the unfavorable side.

The retail inflation rate went up 5.03 percent in February this year because of rising in fuel and food inflation.

The Index of Industrial Production indicating the growth of several sectors in the economy reduced to 1.6 percent in January.

The committee’s objective is to assess and target inflation concerning the provided policy rates.

The monetary policy committee started its operation in 2016. Also, the objective revolves around setting up inflation targets. Further, a target set up at 4 percent for five years and a deviation of 2 percent.

Moreover, the committee set up provided benefits to the policymakers to concentrate on dealing with the inflation.

Though, the concern towards economic growth is rational. The year of pandemic raised worry not only in the country but at the global level as well.

The flat curve of economic growth surges the distress in the central bank and international institutions.

Additionally, the committee members formulated the goal to bring back the economic growth on track. The flattening of the curve resulted due to the pandemic hitting the growth by shut down of the economic activities.

Also, the market raised concerns over the bond yields. The government securities yields may rise with the rise in global yields.

In conclusion, the MPC will aim to enhance the economy and growth along with increased public and private investment. Consequently, the rise in investment will bring back consumer demand.

Also, the experts specified the lack of investment resulted in slow growth.


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