Finance

RBI monetary policy Live updates:  Key takeaways of RBI Governor Shaktikanta Das’ speech

According to the RBI MPC, the policy repo rate will remain unchanged at 4 percent. Reverse repo rate will remain at 3.35 percent.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) held key interest rates constant on February 10 and maintained an accommodating stance in its first policy meeting following the Union Budget 2022, as predicted. The MPC, chaired by RBI Governor Shaktikanta Das, has kept interest rates unchanged for the ninth time in a row.

The three-day RBI MPC meeting, which began on February 8 and ended today, February 10, came to a close. Following the death of legendary vocalist Lata Mangeshkar on February 6, Maharashtra declared February 6 as a day of sorrow.

The most recent MPC meeting, held in December 2021, kept the benchmark interest rate at 4% and elected to remain accommodative in the face of concerns over the emergence of the new coronavirus strain Omicron. For the eighth time in a row, the rate-setting panel maintained the status quo.

Lets take a look at the key takeaways of RBI Governor Shaktikanta Das’ speech:

The MPC has kept the repo and reverse repo rates at 4% and 3.35 percent, respectively. Furthermore, in the face of growing inflation, the panel maintained its ‘accommodative’ position.

— The Reserve Bank of India forecasts 7.8 percent GDP growth in FY23. Das predicts that 9.2 percent real GDP growth in FY22 will propel the economy over pre-pandemic levels.

— The FY22 CPI inflation forecast of 5.3 percent has been reaffirmed. In the second half of FY23, it is expected to fall closer to the 4.00 percent target, allowing monetary policy to remain accommodating.

– As a result of Omicron, economic activity has slowed slightly. Given the inflation and growth expectations, as well as the uncertainty surrounding global spillovers and Omicron, the economy need ongoing policy help.

— The rupee has shown persistence in the face of global spillovers. In FY22, the current account deficit is forecast to be less than 2% of GDP. The RBI is committed to ensuring that the government borrowing programme runs smoothly.

— It has been suggested that the ceiling on e-vouchers be increased from Rs 10,000 to Rs 1 lakh.

— Variable rate repo operations of various maturities will henceforth be performed on an as-needed basis. Second, variable rate repurchase agreements and variable rate reverse repurchase agreements with 14-day maturities will be the major liquidity sources. The third step, fine turning, will facilitate these operations. Lastly, as of March 1, the fixed rate reverse repo and Marginal Standing Facility will only be available on all days from 5:30 p.m. to 11:59 p.m.

Published by
Business Outreach