"Overall, the second-round effects of food and fuel inflation on headline have become subdued, especially after the adoption of flexible inflation targeting (FIT) in India," says the apex bank.
Amid fears over retail inflation, everyone believes that the central bank will continue to wait and watch as a rate hike is out of question for now. The June inflation numbers will be key.
While the Reserve Bank of India kept policy rates and its accommodative stance unchanged, additional monetary measures have been brought in to fight the second wave of Covid-19.
The central bank unveils liquidity facility of ₹50,000 crore for access to emergency health services, and ₹10,000 crore for small finance banks’ on-lending, among a slew of measures to fight Covid-19.
The recent surge in Covid-19 infections, the central bank says, adds uncertainty to the outlook on domestic growth as restrictions could dampen demand improvement and delay the return of normalcy.