RBI Monetary Policy: Major Highlights Of The Announcement Made By Governor Shaktikanta Das
The central bank's MPC on Friday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance despite rising inflation
New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance despite rising inflation.
This is the 11th time in a row that the MPC headed by RBI Governor Shaktikanta Das has maintained the status quo. The central bank had last revised its policy repo rate or the short-term lending rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low.
Here are some of the key highlights of the announcement.
In the first MPC announcement of FY23, the RBI projected inflation to be at 5.7 per cent this financial year, compared to 4.5 per cent in 2021-22.
Governor Das said that the central bank would restore the width of the liquidity adjustment facility to 50 basis points.
The RBI cuts growth projection to 7.2 per cent for FY23 as the ongoing conflict between Russia and Ukraine could impede economic recovery.
Inflation is expected to rise to 5.7 per cent from 4.5 per cent projected earlier for FY23, said Das.
CPI inflation is seen averaging to 6.3 per cent in Q1 or first quarter (April-June 2022), 5.8 per cent in Q2 or second quarter (July-September 2022), 5.4 per cent in Q3 or third quarter (October-December 2022), and 5.1 per cent in the fourth quarter or Q4 (January-March 2023) of the current fiscal year.
As Indian economy is steadily reviving from pandemic-induced slowdown, MPC has decided to keep reverse repo rate unchanged at 3.35 per cent.
MSF rate and bank rate remain unchanged at 4.25 per cent.
The MPC has decided to restore the width of liquidity adjustment facilities, i.e. LAF corridor to 50 basis points, the position that prevailed before the pandemic.
The RBI has proposed to make cardless cash withdrawal facility available at all ATMs across all banks in India.
Das said that robust Rabi crop should support rural demand; pick-up in contact-intensive services to help boost urban demand.
The RBI to maintain orderly financial condition in market and will take steps to contain impact of global spillovers.
Indian economy comforted by large forex reserves, the governor added.
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