A premature rollback of loose monetary policies could have a detrimental effect on economic revival, which continues to be "fragile and narrow", Reserve Bank of India Governor Shaktikanta Das said in an interview.

While acknowledging that a delayed withdrawal of accommodative measures would also pose difficulties, Das said the central bank was fully aware of both sides of the situation and would take a balanced call at the correct time. "Let me reiterate that our forward guidance to markets stands, and we shall adhere to it," Das told the newspaper.

Over the last nine months, the RBI has extended substantial monetary accommodation to help the economy recover from the damage inflicted by the COVID19 crisis. The central bank has lowered the repo rate by 115 basis points since March and has infused massive amounts of liquidity into the banking system.

There were talks about the government looking at relaxing the inflation target band to provide the central bank with more flexibility in supporting growth in recent weeks.
The MPC is currently mandated to keep retail inflation within the 2percent-6percent range while targeting medium-term inflation at 4percent.

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