The Reserve Bank of India will not hesitate to use conventional and unconventional tools to mitigate the impact of coronavirus, or COVID-19, and revive growth and preserve financial stability, Governor Shaktikanta Das said.
According to the minutes of the monetary policy committee meeting held on March 24, 26 and 27, the governor said it is comforting that the macroeconomic fundamentals of the Indian economy continue to be sound compared with the conditions that prevailed in the aftermath of the global financial crisis.
At the meeting, the committee had reduced the repo rate by 75 basis points and adjusted the marginal standing facility and the bank rate. The cash reserve ratio was lowered by 100 basis points.
The COVID-19 pandemic is an invisible assassin which needs to be contained quickly and the situation currently facing the country is unprecedented, the governor noted.
It is imperative to make all-out efforts to protect the domestic economy from the adverse impact of the pandemic.
"The path to normalisation of activity, however, is contingent on how India's COVID-19 epidemiological curve evolves, amidst heightened uncertainty," he added.
In this challenging circumstance, monetary policy has to assume an avant garde role, policymaker Michael Patra, said. He said the monetary policy has to provide confidence and assuage fear.
Janak Raj, another MPC member said the main challenge for monetary policy at this juncture is to ensure that the adverse impact of COVID-19 on domestic demand is not amplified.