Three-membered Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained an accommodative stance and kept the repo rate unchanged at 4 per cent, in order to revive & sustain growth and reduce the impact of Covid-19 pandemic.

Key points

• Monetary Policy Committee has also ensured that inflation remains within the target.
• Reverse repo rate was also kept as earlier at 3.35 per cent.
• Marginal Standing Facility (MSF) rate and bank rate also remain unchanged at 4.25 per cent.

This was the eighth consecutive time that RBI has maintained a status quo on policy rate. The central bank had last revised its policy rate on May 22, 2020, in an off-policy cycle in order to boost the demand by cutting interest rates.

According to RBI Governor, high-frequency indicators point that economic activity has gained momentum. Core inflation is still sticky. In July-September, CPI inflation was lower than expected. Currently, India is in a much better place as compared to the last MPC meeting. Now, growth impulses are strengthening. Inflation trajectory is also favourable than it was expected.

MPC has retained the GDP forecast for FY 2021-22 at 9.5 per cent. GDP projection for Q2 FY22 is estimated at 7.9 per cent, Q3 at 6.8 percent while Q4  at 6.1 per cent. Real GDP growth for Q1 of FY 2022-23 is forecasted as 17.2 per cent.

For financial year 2021-22, CPI inflation is projected at 5.3 per cent.