RBI Governor Shaktikanta Das (file image)
The monetary policy committee (MPC), on October 8, kept the key lending rate, the repo rate, unchanged at 4 percent and retained the monetary stance as ‘accommodative’. This is the eighth consecutive time the MPC maintained a status quo in rates.
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Here are the key takeaways of the Reserve Bank of India Governor Shaktikanta Das’ speech.
RBI Governor Shaktikanta Das said the central bank will ensure that inflation remains within target range. He said the MPC’s policy rate decision was unanimous, while the decision on the stance was 5:1.
RBI MPC keeps repo rate, reverse repo rate unchanged. Repo rate unchanged at 4 percent while the reverse repo rate kept the same at 3.5 percent.
The projection for real GDP growth is retained at 9.5 percent for FY 2021-22. This consists of 7.9 percent in Q2, 6.8 percent in Q3 and 6.1 percent in Q4 of 2021-22.
The Real GDP growth for Q1 of FY 2022-23 is projected at 17.2 percent.
The central bank has lowered its FY22 CPI Inflation target to 5.3 percent from the earlier 5.7 percent. It also saw July-September CPI inflation at 5.1 percent compared to the 5.9 earlier. The October-December CPI Inflation is estimated at 4.5 percent compared to the 5.3 percent earlier.
The governor also said that India was in a much better place in October than in April, when the last MPC meeting had been held. Growth impulses are strengthening, inflation trajectory more favourable than expected.
The recovery of the Indian economy is gaining traction; it is in better shape than the last MPC meeting. Growth impulses are strengthening, inflation trajectory favourable than anticipated; hope to sail towards normal times, due to resilience of economic fundamentals of our economy, he said.
Special three-year LTRO of Rs 10,000 crore for SFBs extended till December 31, and made available on-tap. Proposed to introduce a framework for retail digital payments in offline mode. Its has also been proposed to raise the transaction limit on IMPS transactions to Rs 5 lakh from the current cap of Rs 2 lakh.
Auctions of the Variable Reverse Repo (VRR) will be increased from Rs 4 trillion to Rs 6 trillion every two weeks. RBI may hold a 28-day VRR auction in addition to the 14-day VRR auctions. The amount of liquidity absorbed in the first week of December through fixed-rate auctions is expected to be about Rs 2-3 trillion.
IMPS transaction limit raised to Rs 5 lakh, said Das.
