Key rates unchanged, GDP projected at 10.5%: Major announcements by RBI
While announcing the decisions, RBI governor Shaktikanta Das said that the Monetary Policy Committee (MPC) had voted unanimously to keep the repo rate unchanged at 4 per cent.
The Reserve Bank of India (RBI) on Friday announced its bi-monthly monetary policy decision, which comes four days after the Union Budget presented by Union finance minister Nirmala Sitharaman. Equity benchmarks Sensex and Nifty advanced their record-setting spree in early trade, according to news agency PTI. Sensex was up 0.7% at 50,614.29 while Nifty went up to 14,895.65.
While announcing the decisions, RBI governor Shaktikanta Das said that the Monetary Policy Committee (MPC) had voted unanimously to keep the repo rate unchanged at 4 per cent. The repo rate had been slashed by 115 basis points since late March last year to support growth. The Gross Domestic Product (GDP) growth rate was forecasted at 10.5 per cent for the upcoming financial year.
Das towards the end of the address said that while 2020 tested India's capability and endurance, this year would set the stage for a new economic era adding that the economy would be only moving in the upward direction from future. “It is our strong conviction, backed by forecast, that in 2021-22 we will undo the damage inflicted by Covid-19 on the economy," he said.
Here are the major announcements made by the central bank’s MPC :
1. The RBI decided to keep the benchmark repo rate unchanged at 4 per cent till March end with an upper tolerance of 6 per cent and lower tolerance of 2 per cent. Consequently, the reverse repo rate also remained unchanged at 3.35 per cent. This is the fourth time in a row that MPC decided to keep the policy rate unchanged.
2. The MPC also decided to continue with an accommodative stance of monetary policy as long as necessary at least throughout the current financial year along with the consecutive year in order to “revive growth on a durable basis and mitigate the impact of the coronavirus (Covid-19) disease pandemic.”
3. The GDP growth rate was projected at 10.5 per cent for the financial year 2021-2022 by the RBI. Das added the economy would rebound to 10.5 per cent in the next financial year.
4. The RBI announced that the retail inflation rate would come down to 5.2 per cent in the current quarter and further decline to 4.3 per cent by the third quarter of the next fiscal. “The Centre will be reviewing the inflation target by March-end,” Das added.