The Monetary Policy Committee of the central bank recently held its meeting on February 3 to February 5, 2021 to discuss the current macroeconomic financial developments in India.
Key Decisions by the committee
- The committee has decided to keep the repo rate unchanged at the 4 percent.
- It has decided to continue its accommodative stance in accordance with the necessities in the current financial year.
- The accommodative stance will continue into the next financial year as well so as to revive the growth and to keep inflation within the set target.
- Marginal standing facility rate is also unchanged at 4.25%.
- The committee has also kept the bank rate unchanged at 4.25 percent.
- The reverse repo rate is also same at 3.35 percent as earlier.
Highlights
- The committee highlights that, the Inflation in last two months was better than expected. Inflation has come down to the Upper tolerance level of 6 percent for the first time since covid-19 pandemic breakdown.
- Committee also highlights that, factors that could change the food inflation trajectory include the Good Rabi Crop, Huge Kharif harvest, huge winter supplies of vegetables and soft poultry demand.
- The committee has projected the real GDP growth at 10.5 percent in 2021-22.
Is economy recovering?
The Governor of the reserve Bank of India noted that there are signs of recovery. These signs have strengthened since the last meeting of the MPC. He highlighted,
- There is improvement in the capacity utilisation of the manufacturing sector to 63.3 percent.
- He confidence of the consumer is also reviving.
- The business expectations in the manufacturing, services and infrastructure sectors are also strengthening.
- Domestic trading activities is growing along with the movement of goods and people.
In the line, COVID-19 vaccination drive will further boost the restoration of the other contact intensive sectors which in turn will help in reviving the economy.