New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at 4 per cent for the 10th time in a row and retained the accommodative stance in its first policy meeting after the Union Budget presented by Finance Minister Nirmala Sitharaman on February 1. This is the 10th time in a row that the MPC headed by RBI Governor Shaktikanta Das has maintained the status quo and continued with accommodative stance in the backdrop of an elevated level of inflation.
Here are the key excerpts:
The MPC has kept the repo rate unchanged at 4 per cent, while the reverse repo rate at 3.35 per cent in the backdrop of an elevated level of inflation.
The panel has mainted the accommodative stance in its first policy meeting after the Union Budget.
The MPC has voted unanimously for keeping interest rates unchanged as long as necessary to support growth and keep inflation within the target.
The central bank has projected the country’s GDP rate at at 7.8 per cent for FY22-23.
The GDP projection for the current fiscal year was retained at 9.2 per cent.
The bi-monthly policy comes against the backdrop of the Budget wherein a nominal gross GDP of 11.1 per cent has been estimated for FY22-23.
The CPI inflation projection retained at 5.3 per cent for FY21-22 and 4.5 per cent for FY22-23.
Retail inflation rose to a five-month high at 5.59 per cent in December from 4.91 per cent in November, mainly because of an uptick in food prices.
Private consumption still lagging.
System liquidity remains in large surplus.
The cap of e-vouchers has been proposed to be increased from Rs 10,000 to Rs 1 lakh. The e-rupee had been launched by the NPCI last year.
The RBI has hiked the limit for inflows under the Voluntary Retention Scheme (VRS) to Rs 2.5 lakh crore from Rs 1.5 lakh crore.
Variable rate repo (VRR) operations of varying tenors will henceforth be conducted as and when warranted.
VRR and variable reverse repo rate (VRRR) auctions of 14 days tenor will operate as the main liquidity management tool. With effect from March 1, fixed rate reverse repo and MSF operations will be available between 5:30 pm till 11:59 pm on all days.
There has been a loss of momentum in the economic activity because of the Omron, Due to such uncertainties, there’s a need for continued policy support during the time of the pandemic.
In his closing remarks, the governor mentioned the song Aaj phir jeena kee tamana hai by late Lata Mangeshkar, saying that her song will encapsulate what the RBI has been trying to do.
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