RBI keeps repo rate unchanged, projects 7.8 GDP Growth

Reserve Bank of India monetary policy committee (MPC) headed by RBI Governor Shaktikanta Das on Wednesday unanimously decided to keep Repo Rate unchanged at 4% for the tenth consecutive time. The six-member MPC met for three days since February 8 before taking the decision. RBI has projected real GDP growth for fiscal year 2023 at 7.8%.
The three-day MPC meeting that began on February 8, concluded today . The process was deferred by a day after Maharashtra declared a day of mourning on February 6 following the death of legendary singer Lata Mangeshkar.
The repo rate was unchanged at 4% even when the panel met in December 2021, RBI continued its accommodative stance due to the emergence of Omicron variant of Coronavirus that led to a third wave in the country. It was then 9th consecutive row that status quo was maintained
TLJ takes a look at Key takeaways from RBI Governor Shaktikanta Das’s speech
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-Repo rate and reverse repo rate has been kept unchanged at 4% and 3.35% respectively by the MPC.
– Das projected a steady real GDP growth of 7.8 percent for FY23 and for 2022 it is expected at 9.2% taking to PRE-COVID high
-The Omicron variant driven third wave has caused disruption in economic activities. Considering the outlook for inflation and growth a policy support is warranted
-CPI inflation forecast for FY22 has been retained at 5.3 percent. It expected to moderate closer to 4.00 percent target in second half of FY23 and provide room for monetary policy to remain accommodative
-The cap of e-vouchers has been proposed to be increased from Rs 10,000 to Rs 1 lakh.
-Variable rate repo operations of varying tenors will henceforth be conducted as and when warranted. Second, variable rate repos and variable rate reverse repos of 14-day tenors will operate as the main liquidity management tool. Third, these operations will be aided by fine turning operations. Fourth, with effect from March 1, the fixed rate reverse repo and Marginal Standing Facility will only be available from 5:30-11:59PM on all days.

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