RBI governor Shaktikanta Das said the unchanged repo rate for the 11th time is to maintain an “accommodative stance” between the central bank and other banks.
New Delhi: The Reserve Bank of India (RBI) Friday issued the monetary policy report formed after a meeting of the Monetary Policy Committee and said the key lending rates, repo rate and reverse repo rate, will remain unchanged at 4% and 4.5%, respectively. The repo rate remains unchanged for the 11th consecutive time. However, the central bank now sees lower-than-forecast growth and higher inflation.
RBI governor Shaktikanta Das said the unchanged repo rate for the 11th time is to maintain an “accommodative stance” between the central bank and other banks.
Addressing the media after the monetary policy meeting, Das said the RBI will restore the liquidity adjustment facility (LAF) corridor to 50 bps, as it was pre-Covid. The Marginal standing facility (MSF) Rate
Das said, “RBI revises its stance to less accommodative to revive, sustain growth and contain inflation. Global food prices have hardened significantly. Risk aversion towards assets of emerging market economies has led to large capital outflows and depreciating bias in their currencies.”
On the reverse repo rate, Das said, “Fixed rate reverse repo (FRRR) rate is retained at 3.35%. It will remain as a part of RBI’s toolkit and its operation will be at the discretion of the RBI for purposes specified from time to time. The FRRR along with the SDF will impart flexibility to the RBI’s liquidity management framework.”
Meanwhile, the RBI also slashed the growth projection from 7.8% to 7.2% and raised the inflation forecast to 5.7% from 4.5%.
On GDP, the RBI governor said the real GDP growth for 2022-23 is now projected at 7.2% with Q1 2022-23 at 16.2%, Q2 at 6.2%, Q3 at 4.1% and Q4 at 4%, assuming crude oil (Indian basket) at US dollar 100 per barrel during 2022-23.
