RBI Monetary Policy: Key Rates Remain Unchanged, Central Bank Maintains Accommodative Stance

The repo rate has been kept unchanged at 4% while the Reverse Repo rate remains unchanged at 3.35%.

RBI HQ

In its monetary policy announcement on Friday, the Reserve Bank of India (RBI) has maintained an accommodative stance and kept the key policy rates unchanged. The RBI announcement came after the Monetary Policy Committee (MPC) concluded its three-day meet.  The repo rate has been kept unchanged at 4% while the Reverse Repo rate remains unchanged at 3.35%. Also Read: Rakesh Tikait To ABP News, 'If PM Modi Is One Phone Call Away, Then What Is The Number?'

In tune with the expectations the MPC voted in favour of a pause on February 5. The MPC met three times on Feb3, 4, 5th and deliberated on teh economic conditions both domestic and global.

The bank rate also remained unchanged as the commitee voted unanimously.  Governor Shaktikanta Das announced that MSF and Bank Rate remain unchanged at 4.25%. The central bank has lowered its policy rates by a cumulative 110 basis points since March last year.

This will be the first meeting of the six-member MPC since Finance Minister Nirmala Sitharaman presented Budget 2021 in the Lok Sabha on February 1, amid the Covid-19 pandemic.

Here are the key announcements

On Inflation

The committee expects CPI inflation to be 5.2% in Q4 of this fiscal year. It is expected to be in the range of 5.2% to 5% in the first half of the next fiscal year. For Q3 of next fiscal year, inflation is estimated at 4.3% with risk broadly balanced. MPC expects vegetable prices to remain soft.

On Growth

GDP growth is estimated to be at 10.5% in 2021-22. It further expects GDP to be in the range of 26.2% to 8.3% in H1 and 6% in Q3 of the coming fiscal year.

CRR will be restored to 3.5% effective from March 27, and 4% effective from May 22, 2021, in two phases. CRR normalisation opens up space for a variety of market operations to inject market liquidity. 

RBI governor Shaktikanta Das said that the MPC has proposed to provide funds from banks under the TLTRO on tap scheme to NBFC to specified sectors. 
The central bank will ensure the government's borrowing plans are met without hindering with the market.

Marginal Standing Facility (MSF) has been extended by another 6 months, up to Septemeber 30, 2021. The move is aimed at making it easier for lender to access funds.

The governor said consumer confidence is reviving and business expectations of manufacturing, services and infrastructure remain upbeat. The movement of goods and people and domestic trading activities are growing at a robust pace.