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RBI maintains status quo on key policy rates

As part of its accommodative stance, the Reserve Bank of India (RBI) maintained status on key policy rate in its bimonthly policy review here today.

RBI needs to keep re-inventing monetary policy as growth and inflation remains volatile
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RBI needs to keep re-inventing monetary policy as growth and inflation remains volatile

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Mumbai, Feb 05 As part of its accommodative stance, the Reserve Bank of India (RBI) maintained status on key policy rate in its bimonthly policy review here today.

Thus, the repo rate remains unchanged at four per cent.

Not to mention that the six-member MPC, in its first meeting after Budget, has kept the rate unchanged at a record low of 4%, and the reverse repo rate is 3.35% for last three meetings in a row.

The RBI's Monetary Policy Committee (MPC), which concluded today, maintained the interest rates and continue with an accommodative policy stance to push the growth.

"MPC voted unanimously to leave the policy repo rate unchanged at four per cent. The MPC also unanimously decided to continue accommodative monetary policy in the current fiscal and next year," said RBI Governor Shaktikanta Das, who chairs the MPC, on Friday.

Interestingly, the MPC has projected a GDP growth rate of 10.5 per cent for 2021-22. It has also revised downwards the forecast for retail inflation to 5.2 per cent for the fourth quarter of the fiscal and to 5.2 per cent to five per cent for the first half of the fiscal.

The Budget, which was unveiled by the Finance Minister on the floor of Parliament on February 01, had revised the fiscal deficit to 9.5 per cent for FY21 and 6.8 per cent for FY22, indicating that the government's borrowings would be high and in such a scenario it would be difficult for the RBI to maintain low interest rates _to encourage banks to lend more.

Kumud Das
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