RBI keeps repo rate unchanged, predicts GDP growth rate at 10.5% for FY 2022

The Reserve Bank of India (RBI) on Friday maintained status quo for the fourth straight time and announced that it has decided to keep the key repo rate unchanged at 4 per cent. Following this, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with the RBI.

In the first monetary policy since Finance Minister Nirmala Sitharaman presented Budget 2021, RBI Governor Shaktikanta Das projected GDP growth of 10.5 per cent for FY 2022.

He said, “GDP growth is projected at 10.5 per cent in 2021-2022 in the range of 26.2 per cent to 8.3 per cent in H1 and 6 per cent in Q3 of the next fiscal.”

“Inflation outcomes have been better than expected. Inflation has eased below the upper tolerance level of 6 per cent,” RBI Governor Shaktikanta Das said in a video address. He added that the committee is of the view that it is important to revive growth on a durable basis while ensuring inflation remains within the targeted levels.

The Monetary Policy Committee headed by the RBI Governor has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.

In another major announcement, RBI has said that retail investors will be provided online access to the government securities market, primary as well as secondary. This will be done directly through opening an account with the Reserve Bank and is a major structural reform, placing India among a select few countries that have similar facilities.