The Reserve Bank of India has retained its key short-term lending rates along with the growth-oriented accommodative stance during the second monetary policy review of FY22.
Accordingly, the Monetary Policy Committee (MPC) of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks, at 4 per cent.
Likewise, the reverse repo rate was kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the ‘Bank Rate’ at 4.25 per cent.
It was widely expected that MPC would hold rates and the accommodative stance.
As of now, India suffers from a massive spike in Covid-19 infections.
Consequently, the situation has forced state governments to implement local lockdowns and travel restrictions which have started to slowdown economic activity.
This trend has impacted economic activity.
Accordingly, the RBI revised India’s FY22 growth estimates to 9.5 per cent from 10.5 per cent.
Besides, he said vaccination process should help to normalise economic activity.
Furthermore, the RBI pegged retail inflation for FY22 CPI-based inflation at 5.2 per cent.