RBI projects real GDP growth for FY2021-22 at 10.5 pc, keeps repo rate unchanged at 4 per cent
New Delhi | Jagran Business Desk: The Reserve Bank of India (RBI) on Wednesday kept the key lending rates unchanged maintaining the accommodative policy stance to support growth and keep inflation at the targeted level. The repo rate and reverse repo rate thus remain unchanged at 4 per cent and 3.35 per cent respectively.
RBI Governor Shaktikantha Das made this announcement after the end of the scheduled review of the Monetary Policy Committee (MPC) that began on Monday. This is the first bi-monthly monetary policy review for the new financial year 2021-22. This came amid a sharp new wave of Covid-19 cases in several states and local lockdowns, reigniting uncertainty regarding economic outlook in the immediate term.
"The recent surge in Covid-19 infections has created uncertainty over economic growth recovery. The central bank will remain accommodative as long as necessary to sustain growth on a durable basis," said RBI Governor Shaktikanta Das after the three-day meeting of its six-member monetary policy committee (MPC).
Repo is the rate at which RBI lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation. The reverse repo rate is the rate at which the RBI borrows from banks.
The RBI also retained a GDP growth projection at 10.5 per cent in the financial year 2021-22. At the same time, it revised the projection for CPI-based inflation to 5.2 per cent in Q1 and Q2 of FY22, 5.3 per cent in Q3 and 5.1 per cent in Q4.
"Taking into consideration all these factors, the projection for CPI inflation has been revised to 5 per cent in Q4 of FY2021; 5.2 per cent in Q1 FY2021-22; 5.2 per cent also in Q2 of FY22; 4.4 pc in Q3 and 5.1 per cent in Q4 with risks broadly balanced," Das said.
Earlier, the central bank had projected retail inflation at 5.2 per cent for the 2021 March quarter. RBI has the mandate to keep inflation at 4 per cent with a bias of plus or minus 2 per cent.
"The rural demand remains resilient, urban demand is gaining traction and should pick up further with a pick-up in vaccination drive," said Das. "The global economy is showing some recovery but the path remains uncertain."
India's focus should be on containing fresh infection spread and economic revival, he added. The RBI will ensure the orderly conduct of government borrowing and preserve financial stability, said Das.
(With Agencies Inputs)
Posted By: Talibuddin Khan