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RBI Monetary Policy: Top 10 Takeaways – BloombergQuint

Within days of the Union Budget 2021 presentation, the Monetary Policy Committee met and decided to keep key interest rates unchanged. These are the key takeaways from the MPC resolution and announcements made alongside by the Reserve Bank of India.

Policy Rates Unchanged

The Monetary Policy Committee voted unanimously to keep the repo rate unchanged at 4% for the fourth straight meet since May. The central bank that controls the reverse repo rate separately decided to keep it unchanged at 3.35%.

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CRR Normalisation In Two Steps

While keeping rates unchanged, the RBI decided to reverse the Cash Reserve Ratio cut announced in March 2020 after the Covid-19 crisis hit. RBI Governor Shaktikanta Das said the normalisation of CRR will leave space for the central bank to put other liquidity management tools to work.

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Direct Investment In Government Bonds

Retail investors will now have greater access to the government bond market via a new direct investment option being offered by the central bank.

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NBFCs Included In TLTRO

The Reserve Bank of India will allow banks to extend credit to non-banking finance companies under the targeted long-term repo operations scheme. This will help provide liquidity to NBFCs.

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RBI Projects FY22 Real GDP At 10.5%, CPI Inflation At 5.2% In Q4 FY21

Growth is recovering, and the outlook has improved significantly with the rollout of the vaccine programme in the country, the Monetary Policy resolution said. The recovery, however, is still to gather firm traction and hence continued policy support is crucial.

In its resolution, the MPC said the sharp correction in food prices has improved the food price outlook, but some pressures persist, and core inflation remains elevated. An unwinding of taxes on petroleum products by both the centre and states could ease the cost push pressures with pump prices of petrol and diesel at historic highs.

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