This is the tenth time in a row that RBI Governor Shaktikanta Das is heading the RBI’s (Reserve Bank of India) Monetary Policy Committee.
The committee has kept key interest rates unchanged on February 10. The three-day MPC meeting began on February 8 and concluded on February 10. This process was delayed by a day after Maharashtra’s government declared a day of mourning on February 6th after legendary singer Lata Mangeshkar passed away.
There has been some loss of momentum in the economic activity due to Omicron and considering the uncertainty of global factors, there is a need for continued support from the monetary policy for the economy.
The Sensex climbed by over 400 points and the Nifty crossed 17,580 points.
Here are the key takeaways from RBIs monetary policy:
- The repo rate and the reverse repo rate have remained unchanged at 4% and 3.35% respectively.
- The GDP grew by 9.2% in FY22 and will take the economy above the pre-pandemic level.
- The RBI projected GDP growth for FY23 at 7.8 per cent.
- The CPI inflation forecast for FY22 has been retained at 5.3%
- The current account deficit is below 2% of FY22 and the rupee has shown resilience in the face of global spillovers.
- The RBI will enhance the maximum limit of e-Rupi vouchers from ₹10,000 to ₹1,00,000.
- The RBI’s stance with respect to cryptocurrencies is very clear. In its opinion, private cryptocurrencies are a big threat to India’s financial and macroeconomic stability as they do not have an underlying asset.
- The RBI is working on Central Bank Digital Currency (CBDC) and once the law is amended, proof of concept and pilot tests will be performed.
- The RBI’s inflation projections are benchmarked to international crude oil prices.
- “Inclusion in global bond indices can work in both ways. This is precisely the reason the RBI and the government is taking a very calibrated approach on this,” said Governor Shaktikanta Das.
- The RBI expects smooth rebalancing of liquidity conditions and their actions have been seamless and have not caused any volatility.
- The accommodative stance is maintained in the policy.
- Since there are no changes in policy rates there will be no immediate impact on EMIs of loans taken by citizens.
