RBI Policy: Unchanged Interest rate and Consistent Accommodative Stance

The Monetary Policy Committee (MPC) of the Reserve Bank of India has decided to keep the key interest rate with more of an accommodative stance. The six members of the Monetary Policy Committee, led by Governor Shaktikanta Das, decided unanimously on Friday that the repo rate will stay unchanged at 4% and the reverse repo rate will stay unchanged at 3.35%. This decision was made public in a televised manner where Gov Shaktikanta Das took the stage and announced it.

Mr. Das has stated that the inflation will continue to be high with some slight relief in winter months with the arrival of perishable and bumper kharif. He also stated that the constraints monetary policy at the present situation from utilizing the volume available to aid in the development of the economy. Das also showed his concern on the signs of recovery and told that the signs of recovery are far from being broad based and are contingent on future policy support.

Das has mentioned earlier that a small opening is available for bold and dynamic resource management policies to break the continued hold of inflation which is being caused by supply-chain distribution, very high margins and secondary taxes. More efforts are necessary to reduce the inflation caused by the suppliers, Das added.

Das also weighed in on the GDP and said the real GDP growth projections now stand at 0.1% for the third quarter and 0.7% for the Fourth quarter for the fiscal year 2020. He also said that the degrowth projection for the fiscal year 2021 is 7.5% for the first quarter and compared it with 9.5% degrowth which was calculated earlier this year.

During the November 26th  address, Das has mentioned that the Indian economy has picked up speed better than anyone can have thought and the recovery is stronger-than-expected.


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