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As expected, the Reserve Bank of India's (RBI) six-member Monetary Policy Committee (MPC) has maintained status quo on key rates in its bi-monthly policy statement for the ninth consecutive time, as announced by Governor Shaktikanta Das on Wednesday. 

The RBI continues to maintain its ‘Accommodative’ stance with five MPC members voting in favour of the same. The repo rate, at which the RBI lends short-term funds to banks, has been kept unchanged at 4% whereas the reverse repo rate, at which the RBI borrows from banks, remains the same at 3.35%. The Marginal Standing Facility (MSF) & Bank Rate also remain unchanged at 4.25%.

Majority of economists expected RBI’s MPC to keep the key lending rates unchanged in the backdrop of global scare due to the new covid variant Omicron. 

RBI has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the coronavirus pandemic, followed by a 135 bps worth of rate cuts since the beginning of 2019.

RBI monetary policy key highlights:

  • Das also said the headline inflation would peak in the fourth quarter of the current fiscal
  • RBI to allow banks to make one-time pre-payment with respect to TLTRO. From January 2022, liquidity absorption will mainly be managed through the auction route
  • RBI Governor Das says central bank would continue to manage liquidity in a manner to maintain financial stability
  • Price stability remains cardinal principle of RBI as it fosters growth, stability: Governor Das while announcing monetary policy
  • Govt consumption is also picking up from August, providing support to aggregate demand, said Das 
  • "The persistence of CPI inflation excluding food & fuel since June 2020 is an area of policy concern in view of input cost pressures that could rapidly be transmitted to retail inflation as demand strengthens"
  • RBI retains CPI inflation projection at 5.3% in 2021-22: Governor Das
  • Cut in excise duty on petrol, diesel to bring down inflation rate on durable basis, said Governor
  • Crude oil prices softening in November would alleviate domestic cost push build up: RBI Governor Das
  • Real GDP growth is projected at 17.2% for Q1 and at 7.8% for Q2 of 2022-23
  • RBI retains the gross domestic product (GDP) growth target at 9.5% in FY22
  • The MPC voted unanimously to maintain status quo, announced Governor Shaktikanta Das

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