Due to the uncertainties of the new Omicron variant on the economy, RBI is forced to be on stand by even when inflation stands as a hurdle.
New Delhi: Today RBI released its monetary policy and kept the Repo Rate and Reverse Repo Rate unchanged at 4 percent and 3.5 percent respectively. The interest rates are also kept at low rates as the Omicron variant is imminent in the world, says Shaktikanta Das, governor of the central bank. Also, the Gross domestic product (GDP) growth projection for the ongoing Financial Year 2021-2022 has been retained at 9.5 percent as the spread of the Omicron variant can become a cause of fluctuation in the economy.
RBI adopted the accommodative policy stance as five MPC members voted in favor of it.
The Monetary Policy Committee has decided to keep the repo rate at 4 percent.
Also, the reverse repo rate will continue to earn 3.35 percent for banks for their deposits kept with RBI.
MPC voted unanimously for keeping the interest rate unchanged due to the threat of Omicron variant
RBI retained its growth projection at 9.5 percent for the financial year 2021-2022.
Governor also said the inflation would peak in the fourth quarter of the current fiscal year.
The inflation projection for the current fiscal year has been retained at 5.3 per.
Retail inflation rose to 4.48 percent in October from 4.35 percent in September, mainly due to higher edible oil prices and fuel prices.
MPC has been given the mandate to maintain annual inflation at 4 percent until March 31, 2026.
The Reserve Bank of India had last revised its policy repo rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low, as per a Press Trust of India.
On Wednesday, Fitch Ratings cut India’s economic growth forecast to 8.4 per cent for the current fiscal year ending March 31, 2022. On the other hand, it raised GDP growth projection for the next financial year to 10.3 per cent. Fitch had in October forecast a GDP growth of 8.7 per cent in 2021-22 (April 2021 to March 2022) fiscal and 10 per cent in FY23.