---
title: "Accommodative Monetary Stance: RBI Meaning | Model Diplomat"
description: "An accommodative monetary stance indicates a central bank's commitment to low interest rates and ample liquidity, crucial for stimulating economic growth."
url: "https://modeldiplomat.com/learn/glossary/accommodative-monetary-stance"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- An accommodative monetary stance is a central bank's declared policy bias toward keeping interest rates low and liquidity ample to stimulate growth.
- How does an accommodative stance differ from an actual repo-rate cut?
- Who decides the monetary policy stance in India?
- What does 'withdrawal of accommodation' mean?
- What are the risks of a prolonged accommodative stance?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

An accommodative monetary stance is a central bank's declared policy bias toward keeping interest rates low and liquidity ample to stimulate growth.

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## Positions at a glance

### Supporters

An accommodative monetary stance is the policy posture a central bank adopts when it signals a forward bias toward lowering its policy interest rate and supplying ample liquidity to the banking system in order to support economic growth and investment. In India the concept is grounded in the amended Reserve Bank of India Act, 1934, specifically the 2016 insertion of Section 45ZA, which established the flexible inflation-targeting framework and the Monetary Policy Committee (MPC). Under this framework the Government of India, in consultation with the RBI, fixed the inflation target at 4 percent Consumer Price Index inflation with a tolerance band of plus or minus 2 percent for the period beginning 2016 and renewed in 2021. The "stance" is the qualitative communication that accompanies the MPC's quantitative rate decision, indicating the likely direction of future policy. An accommodative stance explicitly conveys that the committee will not raise rates and stands ready to ease further if conditions permit.

### Opponents

Procedurally, the stance is determined by the six-member MPC, comprising the RBI Governor as ex officio chairperson, the Deputy Governor in charge of monetary policy, one RBI officer nominated by the Central Board, and three external members appointed by the Central Government. The committee meets at least four times each financial year under Section 45ZI, and decisions are taken by majority vote, with the Governor holding a casting vote in the event of a tie. At each meeting the MPC votes both on the repo rate—the rate at which the RBI lends to commercial banks against government securities—and on the stance. When the committee resolves "to remain accommodative," it is telegraphing to markets that the bias is toward easing, anchoring expectations and reducing borrowing costs across the yield curve before any actual rate change occurs.

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In May 2020 the RBI's Monetary Policy Committee, under Governor Shaktikanta Das, adopted an accommodative stance and cut the repo rate to 4 percent to revive growth amid the COVID-19 pandemic.

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