RBI keeps repo rate unchanged at 4%
What's the story
The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 4 percent for the eighth straight time. The reverse repo rate will be 3.35 percent, the Monetary Policy Committee (MPC) of the RBI decided in its October policy. Repo rates have been kept low since last year in view of the COVID-19 pandemic. Here's more on this.
Quote
'India is in a much better place today'
"India is in a much better place today than at the time of the last MPC meeting. Growth impulses are strengthening, inflation trajectory more favorable than expected," RBI Governor Shaktikanta Das said, after concluding a three-day meeting of the MPC. The MPC also retained an accommodative stance - a willingness to either cut the rates or keep them steady, according to the evolving situation.
Projections
India on track to achieve 9.5% GDP growth: RBI
RBI said that India is on track to achieve a GDP growth of 9.5 percent in the current fiscal year (FY 2021-22). "This consists of 7.9 percent in the second quarter, 6.8 percent in the third quarter and 6.1 percent in the fourth quarter of 2021-22," Das said. Meanwhile, retail inflation has been projected at 5.3 percent.
Details
RBI keeps MSF same at 4.25%
RBI has estimated GDP growth for the first quarter of FY 2022-23 at 17.2 percent. Further, Marginal Standing Facility (MSF) is unchanged at 4.25 percent. In the last MPC meeting, the central bank had kept key rates unchanged for the seventh successive time. "We are seeing some signs of revival in investment activity. Further, with pent-up demand, the festive season should boost urban demand."
Meaning
What are repo and reverse repo rates?
Repo stands for repurchase agreement. It is the rate at which RBI lends money to commercial banks across the country. Separately, the reverse repo rate is the opposite of the repo rate - implying that it refers to the rate at which the RBI borrows funds from commercial banks in the country. Both of these are short-term loans.