As expected, the Reserve Bank of India (RBI) has kept it at 4% without any change in the repo rate. In the meeting of the RBI MPC held today, the RBI has also remained accommodative without any change. The reverse repo rate has also been kept at 3.35 per cent. There is also no change in it. Similarly, MSF and Bank Rate have also been maintained at 4.25 per cent.
The Central Bank last changed its policy rate on 22 May. This change was made keeping in mind the massive injury suffered by the economy due to the Corona epidemic. The Central Bank has cut its policy rates by 1.15 per cent since February 2020.
RBI Governor Shaktikanta Das said that the MPC has unanimously decided not to change the policy rate. He has also further said that RBI will continue to have an accommodative stance as long as it is needed because the biggest need at this time is to support economy and growth. He further said that at present the rate of inflation is below the tolerance label of 6 percent. The prospects for growth have also improved significantly. The MPC was of the opinion that efforts should be continued to promote growth. There are strong signs of recovery in the economy. With this, the list of returning sectors in normal conditions is also increasing.
Some important points of RBI MPC
Stability in inflation – RBI has said that the impact of rising costs is being seen on core inflation. Retail inflation has come down to 6 per cent due to fall in vegetable prices and a favourable base. The retail inflation estimate for the first half of FY 2022 has been revised from the earlier estimate of 4.6 to 5.2 per cent to 5 to 5.2 per cent. Before that, RBI had revised downwards the inflation estimate from 5.8 per cent to 5.2 per cent for the fourth quarter of FY 2021.
Growth Out Look Positive – The RBI says that economic growth is likely to pick up with the beginning of the vaccination campaign. RBI Governor said in his statement that 2021 has started with a positive note with the commencement of vaccination. Signs of strength in the economy are clearly visible since the last MPC meeting. The RBI emphasized that the consumer confidence was returning and the business activities and expectations of the manufacturing sector were gaining momentum.
Apart from this, FDI and FPI have also seen strong growth in recent months. Which expresses their confidence in strengthening and improving the Indian economy. Apart from this, there has also been a boom in the sale of non-food bank credit and bonds. RBI expects GDP growth for FY 2022 to be 10.5 per cent.
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