RBI has retained projections for real GDP growth at 9.5% for FY22. Real GDP for FY23 is projected at 17.2%, however, it ups CPI inflation estimate for FY22 to 5.7% from 5.1%.
With inflation remaining high, and uncertainty about a potential third wave of COVID-19 infections, the Reserve Bank of India opted for status quo on policy rates.
RBI governor Shaktikanta Das left the interest rate unchanged and maintained an accommodative stance on Friday. This implies that the central bank may go for more rate cuts in future if needed to support the economy.
“Recent inflationary pressures are evoking concerns, but the current assessment is that these are transitory,” the RBI governor said.
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 infr
- Special 3-year LTRO of ₹10,000 crore for SFBs has been extended till December 31, and made available on-tap.
- 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%
“Domestic economic activity has started normalising. High-frequency indicators suggest that private and government consumption, investment, external demand are all on the path of regaining traction. Global commodity prices and financial market volatility are downside risk to economic activity,” Das said.
Consequently, the reverse repo rate will also continue to earn 3.35% for banks on their deposits kept with the RBI. One basis point is one-hundredth of a percentage point.
The reverse repo rate is the rate at which banks park excess funds with RBI and reverse repo is the rate at which it borrows from them.