RBI Monetary Policy Update

On February 10, 2022, RBI’s Monetary Policy Committee (MPC) kept key interest rates unchanged. It retained the accommodative stance in its first policy after Union Budget 2022.

Key Facts

• This is the tenth consecutive time that, MPC has maintained the status quo.
• The three-day RBI MPC meeting started on February 8, and concluded on February 10.
• Last MPC was held in December 2021, keeping benchmark interest rate unchanged at 4 percent. It decided to continue with its accommodative stance amid the emergence of new coronavirus variant Omicron.

Key decision of the MPC

• MPC kept the repo rate as well as reverse repo rate unchanged, respectively at 4 percent and 3.35 percent.
• It continued with the ‘accommodative’ stance in the backdrop of high inflation.
• RBI projected GDP growth for Financial Year 2023 at 7.8 percent.
• Real GDP growth of 9.2 percent in Financial Year 2022 (FY 2022) will take economy above pre-pandemic level.
• CPI inflation forecast for FY 2022 has been kept at 5.3 percent. It is expected to reach 4.00 percent target in second quarter of FY23.
• Rupee has shown resilience in light of global spill-overs.
• Current account deficit was below 2 percent of GDP in FY22.
• It proposed to increase the Cap of e-vouchers, from Rs 10,000 to Rs 1 lakh.