Amidst the economic uncertainty caused by the new COVID-19 variant 'Omicron,' the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) voted to maintain status quo on policy rates and maintain policy stance, on Wednesday, 8 December.
The MPC presented its bimonthly monetary policy on Wednesday, with RBI Governor Shaktikanta Das announcing that repo rate and reverse repo rate will remain unchanged at 4% and 3.35%, respectively.
The Marginal Standing Facility (MSF) rate and bank rate also stayed the same at 4.25%. Das stated, "Stance will remain accommodative to revive and sustain growth on a durable basis."
RBI's Gross Domestic Product (GDP) growth projection was retained at 9.5% in FY22, with Das saying that the "real GDP growth is projected at 17.2% for Q1 of 2022-23 and at 7.8% for Q2 of 2022-23."
Meanwhile, the Consumer Price Index (CPI) inflation was retained at 5.3% in 2021-22.
Expressing concern over inflation, the governor noted, "The persistence of CPI inflation excluding food and fuel since June 2020 is an area of policy concern in view of input cost pressures that could rapidly be transmitted to retail inflation as demand strengthens."
Background
The last policy review, which was announced in October, the central bank had maintained its benchmark lending rates for the eighth consecutive time.
Earlier in the year, the economic sector envisaged a hike in reverse repo rate, however the circumstances have increasingly changed since.
Chief Economist and National Director of Research at Knight Frank India, Rajani Sinha had said, "There were growing expectations that in the December MPC meeting, the RBI would hike the reverse repo rate to narrow the corridor between repo and reverse repo rate. However, the new Covid variant 'Omicron' has again pushed the global and Indian economy in a state of uncertainty and nervousness," IANS quoted.
(With inputs from IANS.)
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