RBI policy announcement today after three-day review meetings with MPC
8 April, 2022 | Pravina Srivastava
Shaktikanta Das has delivered the first bi-monthly monetary policy statement of the current fiscal year today
Governor of Reserve Bank of India (RBI) Shaktikanta Das has delivered the first bi-monthly monetary policy statement of the current fiscal year today (Friday) through a press conference.
The announcement follows a three-day review meeting led by Das including RBI’s six-member Monetary Policy Committee.
The conference followed some major announcements on rising oil costs which are driving up commodity prices, resulting in rising inflationary trends.
The government has instructed the central bank to keep inflation at 4%, with a 2 percent upper and lower tolerance range.
The RBI chose to keep its benchmark lending rates at record low levels for the 10th consecutive meeting after the February MPC meeting in order to encourage a long-term recovery of the economy.
The RBI cut its forecasted GDP growth for FY23 to 7.2 percent, down from 7.8 percent at the previous meeting. Assuming the price of oil is $100. In April-June 2022, GDP growth is expected to be 16.2 percent; 6.2 percent in July-September 2022; 4.1 percent in October-December 2022; and 4.0 percent in January-March 2023.
Das later mentioned that inflation is expected to be 5.7 percent in FY23, up from 4.5 percent previously forecast. In April-June 2022, it is expected to rise 6.3 percent; in July-September 2022, it will be at an average 5.0 percent; in October-December 2022, it will be at average 5.4 percent; and in January-March 2023, it will be 5.1 average percent.
Therefore, in its first policy meeting of FY23, the Monetary Policy Committee (MPC) held the key repo rate constant while raising the reverse repo rate by 40 basis points to 3.75 percent and emphasizing the need to reduce support.
The MPC, chaired by RBI Governor Shaktikanta Das, has kept the repo rate unchanged for the eleventh time in a row.
Meanwhile, the RBI has decided to restore the LAF corridor to 50 basis points, as it was before the pandemic. The MSF rate and the Bank rate both stay at 4.25 percent.
The central bank has established the Standing Deposit Facility (SDF), which will serve as the foundation for the Liquidity Adjustment Facility corridor.