RBI Prioritizes Liquidity and Stability for Economic Growth
The Reserve Bank of India intends to maintain sufficient liquidity in the financial system to bolster key sectors of the economy, aligning its operations with monetary policy. Despite inflation fluctuations, RBI is dedicated to ensuring long-term price stability, adapting its strategies to accommodate growth dynamics and external economic shifts.
- Country:
- India
The Reserve Bank of India (RBI) has vowed to uphold liquidity in the financial system, particularly benefiting the productive sectors, as outlined in its recent annual report. This strategic move seeks to synchronize liquidity management with the prevailing monetary policy, reinforcing economic sectors pivotal to growth.
The report predicts a strengthening of domestic economic activities following the initial decline in 2024-25, with headline inflation forecasted to align more closely with RBI targets by 2025-26. Meanwhile, the bank emphasized its dedication to sustaining long-term price stability as a core growth pillar.
During 2024-25, an influx of government spending, post-election, and foreign exchange transactions propelled the system into a liquidity surplus. Complemented by a 25 basis-point cut in the policy repo rate, these measures highlight RBI's strategic focus on maintaining financial equilibrium amidst shifting economic conditions.
(With inputs from agencies.)
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