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RBI Monetary Policy: Repo rate unchanged at 4%, accommodative stance as long as necessary

RBI Monetary Policy 2021 announcements: The six-member Monetary Policy Committee (MPC) headed by Reserve Bank of India (RBI) Governor Shaktikanta Das kept the repo rate unchanged at 4 per cent, while the reverse repo rate also was kept unchanged at 3.35 per cent. Here's what the Indian central bank announced.

RBI Monetary Policy 2021: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged at 4 per cent while maintaining an ‘accommodative stance’ as long as necessary to mitigate the impact of the COVID-19 pandemic, RBI Governor Shaktikanta Das announced Wednesday.

The RBI governor announced that the decision was taken unanimously and added that the reverse repo rate too was kept unchanged at 3.35 per cent.

The Indian central bank was widely expected to keep key interest steady amid a surge in COVID-19 cases in the country. According to a recent Reuters poll, 65 of 66 economists surveyed said the RBI’s monetary policy committee (MPC) will leave rates unchanged.

Last week, the government had asked the RBI to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five-year period ending March 2026.

This is the fifth time in a row that the RBI has maintained a status quo on policy rate. Das said that the central bank will keep inflation at the targeted level and also added that the recent rise in COVID-19 cases has created uncertainty over economic growth recovery.

The RBI governor said that the focus must be on containing the spread of coronavirus and towards economic recovery.

Speaking about the economic growth for the financial year 2021-22 (FY22), Das said that the MPC kept the GDP estimate for FY22 unchanged at 10.5 per cent. The first quarter (Q1FY22) GDP growth outlook is estimated at 22.6 per cent, and the second quarter (Q2FY22 GDP) growth is seen at 8.3 per cent.

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