For the fifth consecutive MPC, there will be no reduction in repo rates; the MPC will maintain its accommodative stance

The policy rate has been maintained at 4% by the Reserve Bank of India and voted unanimously to keep the status quo with an accommodating stance. The marginal standing facility and bank rate remained at 4.25 per cent, while the reverse repo rate remained at 3.5 per cent.

In the face of rising COVID-19 cases in the country, most experts and analysts expected RBI to maintain the status quo. It’s worth remembering that the RBI’s primary interest rate (repo) remained unchanged for the fifth time in a row. In response to the COVID-19 pandemic, the central bank cut policy rates by 75 basis points in March and 40 basis points in May, bringing them to 4%.

Last year, the central bank’s monetary policy committee cut rates by 135 basis points in five consecutive meetings. However, due to the inflation concerns in December, it kept the policy repo at 5.15 per cent unchanged.

The Monetary Policy Committee meets in April for the first time since the decision to hold the inflation target. Even though the Consumer Price Index for February rose by more than 5%, it remains within a reasonable range. As a result, Divakar Vijayasarathy, founder and managing Partner of DVS Advisors LLP, believes the MPC will retain the status quo in terms of interest rate and accommodative stance.

According to economists at Bofa Securities, the Reserve Bank of India’s main focus areas in the future will be price stability, development, and financial stability.

According to a Reuters survey, analysts believe the committee will maintain the current repo rate of 5.15 per cent until October.

In terms of economic growth, Siddhartha Sanyal said, “Further revival of economic growth will critically depend on consumer trust improving further.” A key challenge for the RBI is to sustain orderly conditions in financial markets in the face of massive government borrowing and renewed uncertainty due to a recent increase in COVID infections.

NEED A LOAN?

I have read the Privacy Policy & Agree to Terms & Conditions and authorize Dialabank & its partner institutions to Call or SMS me with reference to my application.


Menu