Informist, Wednesday, Dec 8, 2021
NEW DELHI – The Reserve Bank of India's Monetary Policy Committee today unanimously voted to leave the repo rate unchanged at 4.00%.
The reverse repo and the Marginal Standing Facility rates were also left unchanged at 3.35% and 4.25%, respectively.
In a repeat of October, the committee also voted to retain the accommodative stance of policy by 5 votes to 1 for as long as necessary to revive and sustain growth, while ensuring inflation remains within the target going forward. External member Jayanth Varma, again, expressed reservations on this part of the resolution.
Das is scheduled to address the media at 1200 IST.
The committee's decision to leave the policy rate unchanged at its record low is along expected lines, with all 32 economists, treasurers, and mutual fund managers polled by Informist expecting the same. However, the RBI's decision to retain the reverse repo rate at 3.35% is not exactly in line with expectations, with half of those polled by Informist predicting a 15-40 basis-point hike in the rate as the central bank began the next phase of the normalisation process.
Commenting on the RBI's liquidity operations, Das said the objective is to re-establish the 14-day variable rate reverse repo auction as the main liquidity management operation.
"By and large, the rebalancing of liquidity has proceeded in a timely and non-disruptive manner as planned. It is also fulfilling its objective of strengthening the Reserve Bank's control over the liquidity overhang which, in turn, reinforces the ability of the Reserve Bank to normalise liquidity conditions when warranted," Das said.
The RBI retained its inflation forecast for 2021-22 (Apr-Mar) at 5.3%, although it made changes to its quarterly projections. CPI inflation is now seen averaging 5.1% in Oct-Dec, up from 4.5% forecast earlier. It is then seen rising to 5.7% in Jan-Mar, before easing to 5.0% in the first half of 2022-23.
The previous forecasts were 5.8% for Jan-Mar and 5.2% for Apr-Jun.
"Cost-push pressures from high industrial raw material prices, transportation costs, and global logistics and supply chain bottlenecks continue to impinge on core inflation," the committee said in its resolution.
The GDP growth forecast of 9.5% for 2021-22 was also retained. The GDP is seen growing 6.6% in Oct-Dec, and 6.0% in Jan-Mar, 17.2% in Apr-Jun, and 7.8% in Jul-Sep next year.
The minutes of the committee's meeting will be released on Dec 22.
The committee is scheduled to next meet Feb 7-9. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Reported by Siddharth Upasani
Edited by Saji George Titus
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