RBI Monetary Policy Committee Announcement- Highlights
Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) announced its bi-monthly policy statement on December 8, 2021.
- In its policy statement, RBI has maintained status quo on key rates for the ninth consecutive time.
- RBI continues to maintain its ‘Accommodative’ stance and the five members of MPC have voted in favour of the same.
- The repo rate has been kept unchanged at 4% as well as reverse repo rate remains the same at 3.35%.
- RBI has also not changed the Marginal Standing Facility (MSF) & Bank Rate, keeping at 4.25%.
- The policy statement is in line with the expectations of Majority of economists as world scare due to the new covid variant Omicron.
RBI has decreased the repo rate by a total of 115 basis points (bps) since March 2020 to overcome the blow of coronavirus pandemic. It is followed by a 135 bps rate cuts since 2019.
Key points of the policy statement
- As per RBI governor, headline inflation will peak in the fourth quarter of fiscal year 2021-22.
- RBI will allow banks to make one-time pre-payment related to TLTRO.
- Liquidity absorption will be managed through auction route, starting from January 2022.
- Central bank will continue to manage liquidity to maintain financial stability.
- Government consumption is increasing from August 2021, which is turn is providing support to aggregate demand.
- RBI as retained CPI inflation projection at 5.3% in 2021-22.
- There is a cut in excise duty on petrol, diesel in order to reduce the inflation rate on durable basis.
- RBI has projected the real GDP growth at 17.2% for Q1 and at 7.8% for Q2 of 2022-23.
- In Financial year 2022, RBI retains the GDP growth target at 9.5%.
Monetary Policy Committee (MPC)
MPC is responsible for fixing benchmark interest rate in India. MPC holds its meetings at least 6 times a year and publishes its decisions after each meeting. Committee has 6 members- Three officials of the RBI & three external members nominated by Government of India. The Governor of RBI acts as the chairperson ex officio of the MPC.
Category: Economy & Banking Current Affairs
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