Monetary policy likely to normalise in Q4

To nurture its revised state-based forward guidance, the Monetary Policy Committee (MPC) added the word ‘revive’ to acknowledge the scar of the second wave of the Covid-19 pandemic while continuing with its accommodative stance of sustaining growth on a durable basis. Also, the MPC did not go the full length in acknowledging higher inflationary risks, but modestly increased its average inflation forecast for FY22 to 5.1% (from 5%).