RBI's Bi-monthly Monetary Policy Review: Repo rate unchanged at 4%, real GDP projection retained at 10.5%

The MPC has retained the projection of real GDP growth for 2021-22 at 10.5 percent, informed RBI Governor Shaktikanta Das.

Created On: Apr 7, 2021 11:07 ISTModified On: Apr 7, 2021 11:07 IST
RBI Governor Shaktikanta Das

The Governor of Reserve Bank of India, Shaktikanta Das announced RBI's bi-monthly monetary policy review on April 7, 2021. The Monetary Policy Committee has decided to keep the repo rate unchanged at 4 percent and reverse repo rate stands at 3.5 percent.

The Monetary Policy Committee comprising six members and headed by the RBI Governor had met for three days starting from April 5, 2021. During the review meeting, the MPC decided to maintain its accommodative stance. This is the fifth straight time that the RBI has kept the repo rate unchanged. 

The MPC also retained the projection of real GDP growth for 2021-22 at 10.5 percent, informed RBI Governor Shaktikanta Das.

Domestic Growth Uncertainty 

The RBI Governor noted that the recent surge in COVID19 cases adds uncertainty to the domestic growth outlook amid tightening of restrictions by some state governments. He highlighted that the focus must be on containing the spread of COVID-19 and pushing economic recovery.

CPI Inflation Target Revised

The MPC has revised the projection for CPI inflation to 5% in Q4 of 2021, 5.2%, in Q1 of 2021-22, 5.2% also in Q2 of 2021-22, 4.4% in Q3, and 5.1% in Q4 with risks broadly balanced.

The government had earlier on March 31, 2021, retained the inflation target at 4% with the lower and upper tolerance levels of 2% and 6%, respectively, for the next five years that is from April 2021 to March 2026, informed the RBI Governor Shaktikanta Das.

RBI to provide adequate liquidity

The RBI Governor assured that the Reserve Bank of India will ensure that there is adequate liquidity in the system to ensure that productive sectors get adequate credit.  The apex bank announced fresh lending of Rs 50,000 to all India  financial institutions.

Other Decisions

The non-banking operators like prepaid payment instruments and white label ATMs regulated by the RBI can now take up direct membership in NEFT and RTGS transactions. 

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