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Status Quo in Monetary Policy Rates

Monetary Policy:

 

The Reserve Bank of India maintained status quo in policy rates as the Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate at 4% to keep the stance accommodative.

  • While announcing the Bi-monthly policy RBI Governor Shaktikant Das said, MSF rate and bank rate will remain unchanged at 4.25%.
  • Reverse repo rate will also remain unchanged at 3.35%.
  • MPC has voted 5-1 to continue accommodative monetary policy stance as long as necessary to revive and sustain growth and mitigate impact of #COVID19 on the economy, while ensuring inflation remains within target.
  • He projected real GDP growth at 9.2% for 2021-22 and said that it is modestly above level of GDP for 2019-20. Real GDP growth for 2022-23 was projected at 7.8%.
  • He announced that Variable Rate Repo operations of varying tenures will henceforth be conducted as and when warranted.
  • Variable rate repos and variable rate reverse repos of 14-day tenures will operate as the main liquidity management tool.
  • He informed that from March 1, 2022, fixed rate reverse repo and MSF operations will be available only during 5.30 PM to 11.59 PM on all days, instead of from 9.00 AM to 11.59 PM.
  • He also announced some additional measures like extension of On-tap Liquidity Facilities for Emergency Health Services and Contact-intensive Sectors, voluntary retention route (VRR) – Enhancement of Limits, Review of Credit Default Swaps (CDS) Guidelines, Permission for Banks to deal in Foreign Currency Settled – Rupee Derivatives Market etc.

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