The Monetary Policy Committee (MPC) has decided to maintain status quo and keep interest rates unchanged.
Currently, the repo rate is 4 percent and reverse repo rate is 3.35 percent and MPC voted 5:1 to continue with the accomodative monetary policy stance.
GDP target
RBI retained the GDP growth target for FY22 at 9.5%. The bank has raised GDP growth forecast for Q1FY22 but lowered estimates for remaining three quarters.
CPI inflation
CPI inflation estimate for FY22 is raised to 5.7% from 5.1%.
TLTRO scheme
Further RBI has decided to extend the On-tap TLTRO scheme till December 31, 2021. “Extension in period of relaxation on Marginal Standing Facility till December 31, 2021,” said RBI governor.
G-sec auction
RBI to conduct two more auctions of Rs 25000 cr each on August 12 & 26 under the G-sec Acquisition Programme (G-SAP 2.0)
Comment from RBI governor
Shaktikanta Das, “The MPC voted unanimously to keep the benchmark rates unchanged, and a 5-1 majority supported continuing with the ‘accommodative’ stance of policy for “as long as necessary” to support growth and keep inflation within the target. Some of the high frequency indicators reflect a recovery.
The need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave especially in the background of rising infections in certain parts of the country.”
Comment from Analyst
Suman Chowdhury, Chief Analytical Officer, Acuité Ratings, “As widely expected, MPC has continued with its accommodative stance without any alteration in the benchmark rates given the continuing uncertainty on the domestic growth trajectory and the persistent risks of a fresh wave of the Covid pandemic.
While RBI maintained its GDP growth forecast at 9.5% for FY22, it is interesting to observe that the growth projections for the next few quarters in the current fiscal have been scaled down while enhancing the growth estimates for Q1FY22.
This reflects the central bank’s concerns on the pace of consumption demand revival despite the expectations of a favorable Kharif crop, buoyant exports, steady progress in vaccination, and a conducive monetary and fiscal policy.”
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