Repo rate is the rate at which RBI lends to banks, whereas reverse repo rate is the rate at which it borrows from banks.
Six-member MPC, headed by RBI Governor shaktikanta maidMet for three days from 8 February.
“Overall, taking into account the inflation and growth outlook, particularly taking into account the uncertainties related to improving inflation outlook, Omicron and global spillovers, the MPC was of the view that continued policy support is a sustainable and comprehensive- based recovery,” RBI Governor Shaktikanta Das said in his address.
Here are the major takeaways:
Benchmark rates unchanged for the 10th time in a row
* Both the repo and reverse repo rates were kept unchanged at 4 per cent and 3.5 per cent respectively.
* RBI decided to continue with its accommodative stance in the backdrop of high inflation levels.
* Das said the MPC voted unanimously to keep the interest rate unchanged and decided to continue its accommodative stance for as long as necessary to support growth and keep inflation within the target.
Real GDP growth for FY23 at 7.8%
* For the financial year 2022-23, the real GDP has been estimated at 7.8 percent
* RBI projected real GDP growth at 9.2 per cent for the current fiscal and expects this to propel the economy above pre-pandemic levels.
* “India is charting a different course of recovery from the rest of the world. According to IMF estimates, India is poised to grow at the fastest year-on-year pace among major economies. This recovery is largely due to vaccination and Backed by continued financial and monetary support,” Das said.
*Budget 2022 projected a nominal GDP of 11.1 per cent for FY23
Inflation forecast remains at 5.3%
* For the current fiscal, RBI retained its retail inflation estimate at 5.3 per cent.
* Retail inflation rose to a five-month high of 5.59 per cent in December from 4.91 per cent in November, mainly due to rise in food prices.
* The MPC has been mandated to maintain annual inflation at 4 per cent till March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
The meeting, which was to begin on Monday, was postponed by a day in view of declaring February 7 as a public holiday to mourn the death of legendary singer Lata Mangeshkar in Maharashtra.
The central bank last revised the policy rate on May 22, 2020 to meet demand by cutting the interest rate to a historic low in an off-policy cycle.
The last MPC held in December 2021 had kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance against the backdrop of concerns over the emergence of the new coronavirus variant, Omron.
The MPC assumes significance as it comes days after Finance Minister Nirmala Sitharaman presented the Union Budget 2022.
The budget has projected the Centre’s gross borrowing to be Rs 14.3 lakh crore and for FY22 at Rs 10.5 lakh crore, down from Rs 13.5 lakh crore in this fiscal, while with states, the gross borrowing is Rs 23.3 lakh crore. Will be Net will be Rs 17.8 lakh crore. An attempt has been made in the budget to pay Rs 3.1 lakh crore in the next fiscal, which is Rs 2.7 lakh crore in this fiscal.
(with inputs from agencies)
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