RBI Monetary Policy 2021 Highlights

Monetary Policy

With the Covid pandemic impacting the near-term outlook of the economy and fears over inflation the Reserve Bank of India’s (RBI’s) six-member monetary policy committee, chaired by Governor Shaktikanta Das, on Friday kept the benchmark interest rate unchanged. The repo rate (lending rate) will continue at 4.00% and the reverse repo rate (RBI’s borrowing rate) at 3.35%. With this, the repo rate has remained unchanged for a sixth consecutive time.

RBI revised FY22 real GDP growth projection to 9.5% — 18.5% in Q1, 7.9% in Q2, 7.2% in Q3 and 6.6% in Q4. “Unlike the first wave of Covid-19, where economy came to a standstill, economic impact during the second wave will be contained,” said the RBI Governor.

The projection for CPI-based inflation in FY22 is 5.1% — 5.2% in Q1, 5.4% in Q2, 4.7% in Q3 and 5.3% in Q4.

The monetary policy panel of the RBI has said that the second wave of Covid-19 has altered the near-term outlook, necessitating urgent policy interventions, active monitoring and further timely measures to prevent the emergence of supply chain bottlenecks and build-up of retail margins. Policy support from all sides – fiscal, monetary and sectoral – is required to nurture recovery and expedite return to normalcy.