The Reserve Bank of India (RBI) has not made any change in the prime interest rate while retaining the accommodative stance. RBI Governor Shaktikanta Das, while announcing the decision of the Monetary Policy Committee (MPC) meeting, said that the MPC has decided to keep the prime interest rate (repo rate) at four per cent and the reverse repo rate also stabilized at 3.35 per cent. is kept. Also, the Marginal Standing Facility (MSF) rate and the bank rate have been kept at 4.25 per cent. Repo rate is the interest rate at which central banks give short term loans to commercial banks. In contrast, the rate at which central banks borrow from commercial banks is called the reverse repo rate.
The RBI governor said that the MPC expressed its opinion in favor of maintaining an accommodative stance, leading to further interest rate cuts.
RBI MPC Policy: No change in interest rates, repo rate remains at 4%
Looking at the retail inflation data, it was foreseen that RBI’s MPC may decide to keep the key interest rate stable.
Das said,
“The MPC unanimously decided to keep the repo rate at four per cent after evaluating the domestic and global economic and financial conditions.”
He said,
“The MPC has decided to maintain an accommodative stance in monetary policy as long as it is needed.”
According to Das, India’s economy has entered a decisive phase to deal with the Corona epidemic. Referring to the circumstances preceding the Corona epidemic, he said that several indicators are showing signs of improvement in various sectors of the economy and economic growth has begun.
The RBI governor said that the signs of recovery have started showing signs of improvement in the rural economy. He said that a new record can be created in the country in the production of food grains. Shakti Kant Das said that the monsoon is better and the Kharif crops have increased and the outlook for the rabi crops is also good, which can set a new record in the production of food grains.
He said that there could be positive growth in the fourth quarter of the current financial year 2020-21.
Gross domestic product (GDP) declined by 23.9 per cent in the first quarter of the current fiscal due to a nationwide lockdown to curb the Corona outbreak. However, the RBI governor said that real GDP may fall by 9.5 per cent during FY 2020-21.
Referring to the RBI survey, he said that manufacturing companies are expected to increase their capacity utilization in the third quarter and economic activity will pick up from the third quarter onwards.
However, private investment and exports may moderate, as external demand is still weak.
Das said, “Real GDP may fall by 9.5 per cent in FY 2020-21. ”
He said that with the improvement of programs in the value chain including marketing of agricultural products and cold storage, transportation, processing and changes in labor law, capacity building for vaccine making and its distribution has already opened new doors of investment.
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Source: investmentguruindia.com
