RBI Monetary Policy: Repo rate maintained at 4%; Inflation expected to decrease

Publish Date: 08 Oct, 2021 |

The Monetary Policy Committee, for the 8th consecutive time has decided to maintain the status quo and keep the repo rate unchanged at 4%. The reverse repo rate has also been maintained at 3.35%. The Monetary Policy Committee,in its fourth bi-monthly policy meet for the FY 2021-22, took unanimous decision to keep the repo rate unchanged, while it voted 5:1 to maintain the stance 'accommodative.’  “Based on an assessment of the evolving macroeconomic and financial conditions and the outlook, the MPC voted unanimously to maintain status quo with regard to the policy repo rate and by a majority of 5 to 1 to retain the accommodative policy stance,” said the RBI Governor Shaktikanta Das on Friday.

Following are some of the key announcements made by RBI today:

Repo and reverse repo rate:

The RBI has decided to maintain the status quo and hasn’t changed the repo rate. Hence, the repo rate will continue to be 4%.The reverse repo rate has also been maintained at 3.35%

Real GDP growth:

According to high frequency indicators, economy has been recovering owing to multiple triggers. Considering all the factors, the real GDP growth for the FY22 is projected to be 9.5% with 7.9% in Q2, 6.8% in Q3 and 6.1% in Q4  of FY22. Real GDP growth for Q1 of FY 23 is forecasted to be 17.2%


According to the central bank, The Consumer Price Index Headline is calming down and can bring considerate softening in inflation in near tomorrow. Taking the note of all  the factors, the projection of CPI inflation is retained at 5.3% for FY 22, with 5.1% for Q2, 4.5% for Q3 and 5.8% for Q4. CPI inflation for the Q1 of FY 23 is projected at 5.2%.


The surplus liquidity level in banking system rose further to daily average of Rs. 9.5 lakh crore(upto October 6). 

VRRR Auctions:

RBI said, “Market appetite for VRRRs has been enthusiastic. Moreover, the higher remuneration which VRRR offers vis-àvis the fixed rate reverse repo is also rendering the former relatively attractive.” Keeping in mind the market feedback, RBI is proposed to undertake 14-day VRRR auction on fortnightly basis.

Increase in IMPS limit:

Keeping in mind the growing importance of the IMPS system and to provide more convenience to people, the limit for IMPS has been increased to Rs. 5 lakh from Rs. 2 lakh..

Digital Payment system in offline mode:

To increase the  scope of digital payments, RBI has proposed to introduce and work on creating a framework which can allow retail digital payments to be made in offline mode.



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