The Monetary Policy Committee (MPC) of the Reserve Bank of India, (RBI) based on an assessment of the evolving domestic and global macroeconomic and financial conditions and the outlook, voted unanimously to keep the policy repo rate unchanged at 4%.
This is the seventh time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained the status quo. RBI had last revised its policy rate on 22 May, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low.
MPC decided to maintain status quo, that is keeping benchmark repurchase (repo) rate at 4 percent, Das said while announcing the bi-monthly monetary policy review.
The marginal standing facility (MSF) rate and the bank rate remain unchanged at 4.25%. The reverse repo rate also remains unchanged at 3.35%.
The projection of real GDP growth is retained at 9.5% in 2021-22 consisting of 21.4% in Q1; 7.3%in Q2; 6.3% in Q3; and 6.1% in Q4 of 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2%, the governor said.
He said headline CPI inflation edged up sharply to 6.3% in May and it may remain close to the upper tolerance band up to Q2:2021-22, but these pressures should ebb in Q3:2021-22 on account of kharif harvest arrivals and as supply side measures take effect.
“Taking into consideration all these factors, CPI inflation is now projected at 5.7% during 2021-22: 5.9% in Q2; 5.3% in Q3; and 5.8% in Q4 of 2021-22, with risks broadly balanced,” he said.
CPI inflation for Q1:2022-23 is projected at 5.1%.
It may be noted that the RBI has kept key interest rates unchanged for the seventh consecutive time. The growth forecast for FY22 has also been retained at 9.5 per cent.
The central bank governor also indicated that inflation is gradually coming under control even as fuel prices remain at a record high. He said the improving economic activity with the ebbing of the second wave, and consumption, investment and external demand have been gaining as a result.
Shaktikanta Das added that the financial markets have also benefitted due to improvement in economic activity.
