Monetary Policy stance:
- It is the standpoint of the central Bank /MPC which is nothing but outlook of the central bank for the future Monetary Policy.
- Monetary Policy stance can be accommodative, neutral hawkish and calibrated tightening.
Accommodative Stance:
- An accommodative stance means the central bank is prepared to accommodate the increase in the money supply to boost economic growth in the next monetary policy announcement.
- The central bank typically adopts an accommodative policy when growth needs policy support and inflation is not the immediate concern.
- During this stance period, The central bank is willing to cut the interest rates so as to increase the money supply in the economy.
Neutral Stance:
- A ‘neutral stance’ suggests that the central bank can either cut rate or increase rate in future announcement.
- This stance is typically adopted when the policy priority is equal on both inflation and growth.
Hawkish Stance:
- A Hawkish stance indicates that the central bank’s top priority is to keep the inflation low.
- A hawkish policy also indicates tight monetary policy.
- During such a phase, the central bank is willing to hike interest rates to curb money supply and thus reduce the demand.
Calibrated tightening:
- Calibrated tightening means during the current rate cycle, a cut in the REPO Rate is off the table and the rate hike will happen in a calibrated manner.
- Calibrated tightening Policy may not go for a rate increase but the overall policy stance is tilted towards a rate hike.
