Home / Economy / RBI keeps repo rate unchanged, lowers CPI inflation forecast

Reserve Bank of India (RBI) governor Shaktikanta Das on Friday announced the October bi-monthly monetary policy statement, in which he said that the MPC has decided to keep the repo rate unchanged at 4% for the eighth straight meeting. The MPC continues to maintain its 'Accomodative’ stance. The reverse repo rate will also continue to earn 3.35% for banks for their deposits kept with RBI.

The statement follows the three-day review meeting of the six-member monetary policy committee (MPC), headed by governor Das which had begun on Wednesday. Majority of economists expected RBI’s MPC to keep the key lending rate unchanged.

RBI has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from covid crisis. This follows 135 bps worth of rate cuts since the beginning of 2019.

RBI Monetary Policy highlights:

  • RBI has further proposed to introduce framework for retail digital payment in offline mode across India
  • RBI has proposed to introduce framework for leveraging geo-tagging tech on all new & existing payment infra
  • It has been decided to introduce internal Ombudsman Scheme to address grievances of large NBFC customers, said RBI governor
  • Special 3-year LTRO of 10,000 crore for SFBs has been extended till December 31, and made available on-tap
  • The RBI has enhanced the IMPS (Immediate Payment Service) transaction limit to 5 lakh from 2 lakh
  • Variable Reverse Repo (VRR) auctions will be stepped up fortnightly from 4 trillion to 6 trillion. RBI may complement the 14-day VRR auctions with 28-day VRR auction. Liquidity absorbed in the first week of December under fixed-rate auction to be 2-3 trillion, announced the Governor
  • ‘No need for further bond-buying’: RBI stops G-SAP bond buys, Governor Das said that need for undertaking further G-SAP operations does not arise. He further added that the RBI will remain in preparedness to conduct G-SAP if and when needed. The central bank had bought 2.2 trillion through Government Securities Acquisition Programme (GSAP) in previous two quarters
  • Food inflation expected to remain muted in coming month on back of record production of foodgrains, says RBI Governor
  • Real GDP growth for Q1 of FY 2022-23 is projected at 17.2%
  • The GDP forecast includes 7.9% in Q2, 6.8% in Q3 and 6.1% in the fourth quarter (Q4)
  • RBI retains gross domestic product (GDP) growth target at 9.5% in FY22
  • CPI inflation is seen at 5.3% for this fiscal from earlier estimate of 5.7%
  • July-September consumer price index (CPI) inflation lower than anticipated
  • High frequency indicators suggest economic activity has gained momentum: Governor Das
  • Inflation trajectory turning more favourable than anticipated; economic activity slowly picking up: RBI Governor
  • To continue with accommodative stance to revive, sustain growth on durable basis: Governor Das 
  • MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target: RBI Governor Shaktikanta Das
  • As expected, RBI keeps repo rate unchanged at 4%, maintains the accomodative stance

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