The RBI Monetary Policy Committee decided to keep the repo rate at 4% and the reverse repo rate at 3.35 percent. The Bank Rate and the Marginal Standing Facility Rate are both 4.25 percent. The Reserve Bank of India is also expected to maintain its current monetary stance of "accommodative." When compared to June 2021, we are in a considerably better position. Governor Shaktikanta Das stated that the prospect of a third wave must be kept in mind.
Major Highlights Of RBI Monetary Policy 2021 August
- The MPC voted 5:1 to keep the 'accommodative' position for as long as it is needed to promote growth.
- CPI inflation surprised on the upside in May, according to the RBI Governor, but price movement has slowed.
- RBI maintains its 9.5 percent GDP growth objective for FY22 and raises its CPI inflation forecast for FY22 to 5.7 percent from 5.1 percent.
- Recent inflationary pressures have raised concerns, although the RBI Governor claims that they are only temporary.
- According to RBI Governor, the rate of immunization will accelerate broad-based recovery.
- The on-tap TLTRO plan of the RBI has been extended for another three months, until December 31, 2021.
- The Reserve Bank's secondary market G-sec acquisition scheme (G-SAP) has succeeded in anchoring yield expectations and evoking a strong response from market participants. On August 12 and 26, the RBI will run GSAP auctions.
- More than a hundred initiatives have been announced by the Reserve Bank to lessen the damage.
- Interest rates on market products such as corporate bonds, debentures, CPs, CDs, and T-bills have all decreased in the United States.
- Transmission to lending rates has been stronger for MSMEs, housing, and major sectors in the credit market.
- Recent inflationary pressures have raised concerns, but the current consensus is that they are transient and mostly driven by supply-side factors.
As the COVID-19 second wave fades, there is hope that by implementing suitable pandemic protocols and increasing vaccination rates, we will be able to withstand the third wave, if it occurs. As a country, we must be watchful and prepared to deal with any reappearance of the pandemic caused by more rapidly transmissible mutations of the virus, if it occurs.