RBI Keeps Repo Rates Steady; Continues With Accommodative Stance

In order to fuel growth amid economic fall-out due to the second Covid 19 wave and spiking inflation, RBI MPC in its second bi-monthly monetary policy statement today held key policy rates steady. This is the sixth consecutive time when the monetary policy committee has retained key rates.

The rate setting panel comprising six members unanimously voted for status quo.

With this repo rate continues to be at 4 percent, while reverse repo rate (the rate at which RBI borrows from banks) will be at 3.35%.

Also, the MPC has taken a decision to go with accomodative stance as long as needed to counter the impact of Covid 19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25 percent

In view of all of the factors such as coronavirus pandemic, PMI data, companies adaptation to pandemic working and expectation of normal monsoon, real GDP is seen to be at 9.5 percent for FY22 from 10.5% projected earlier.

CPI inflation is seen at 5.1 percent in FY21-22, 5.2% in Q1, 5.4% in Q2, 4.7% in Q3 and 5.3% in Q4. Recent fall in inflation provides elbow room, policy support from all sides required to regain growth momentum, added the RBI Governor.

"RBI maintains accommodative stance, keeping all rates unchanged, vowing to keep conditions as supportive as possible to revive growth. Impact of second wave on inflation could be handled through supply side measures. The policy bodes well for financial assets as well as the real economy, growth and employment as RBI has again stated its resolve to maintain conducive conditions to support durable growth. The policy is pragmatic, at the same time progressive and preemptive in its approach", said Mr. Sandeep Bagla CEO TRUST Mutual Fund on the RBI MPC outcome.

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