RBI Monetary Policy Update: RBI Kept The Repo Rate Unchanged
RBI Monetary Policy Update: RBI kept the repo rate unchanged at four percent, expressed concern about the inflation rate, said this about the growth rate.
Reserve Bank of India Governor Shaktikanta Das is announcing the monetary policy statement. During this time he said that the repo rate remains at four percent at this time.
This leaves room for a reduction in the repo rate in the coming times. The governor said that the RBI kept the policy rates unchanged and kept the stance liberal.
The Reserve Bank of India has projected a contraction of 7.5 per cent in the real GDP growth rate in the current financial year. The central bank had earlier predicted a contraction of 9.5 per cent in the economy.
RBI has projected GDP growth rate to be 0.1 percent in the third quarter and 0.7 percent in the fourth quarter.
He said that RBI believes that the country’s economy may see a contraction of 7.5 percent in the current financial year.
Das said that the Marginal Standing Facility (MSF) rate and the bank rate remain unchanged at 4.25 percent. At the same time, the reverse repo rate remains at 3.35 percent.
RBI Governor Shaktikanta Das said that the MPC has decided to keep monetary policy as ‘liberal’ as needed, to keep inflation within the target and revive sustainable growth and reduce the impact of Covid-19.
This can continue in the current financial year and till the next year.
The meeting of the Monetary Policy Review Committee under the chairmanship of RBI Governor Dr. Das has been in operation since December 2 and the decisions taken in it are being announced after a three-day meeting.
In the two monetary reviews of the last four months, RBI Governor Dr. Shaktikanta Das has not changed the interest rates.
Despite the huge impact on domestic demand during the Covid period, the RBI governor is expected to be more cautious about the interest rates due to the retail inflation rate hovering around seven percent.
The Monetary Policy Committee (MPC) has set the inflation level for the current fiscal at 4 percent, but for the past few months, it has been close to 7 percent.
The prices of food products are most responsible for this, due to which the arrival of Kovid-19 is being affected. The Yes Bank report on the economy says that RBI can set new targets for inflation.
According to the report released by MK Global Financial Services on Thursday, “The rate of retail inflation is more than 7 percent, but RBI will also have to take a decision on the additional amount of Rs 6 lakh crore available in the market.
“Banks are keeping their cash in other banks at a rate lower than the repo rate (the rate at which banks hold additional funds with other banks or RBI for a few hours or a few days) due to high liquidity.”
This situation has arisen due to the slowing down of corporate and other banking loans.
The central bank made arrangements to provide more liquidity with the banks so that they can give maximum loan.
But there is not so much demand in the market. It remains to be seen what technical steps RBI takes to take this additional capital from the market.
