RBI keeps Repo Rate at 4%, Real GDP growth for FY21 projected at -7.5%

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Biznextindia : As per the expectations, the RBI on Friday maintained status quo of its key policy rates.  While the RBI has kept Repo rate unchanged at 4 per cent and Reverse repo rate unchanged at 3.35 per cent. Marginal Standing Facility and Bank Rate too remain unchanged at 4.25%.

“On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (December 4,2020) has decided to  keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent. Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent” said RBI.

“The MPC also decided to continue with the accommodative stance as long as necessary – at least during the current financial year and into the next financial year – to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward” it added.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth” .

The RBI governor has said that the Indian economy will return to the positive zone in the 2nd half of the 2020-21 financial year. While the economy is expected to grow at 0.1 per cent in the 3rd quarter and 0.7 per cent in the Q4. Overall the Indian economy is likely to grow at -7.5 per cent in the current financial year.

 

9.55 am : RBI may maintain status quo

Biznextindia : The Reserve Bank of India (RBI) will shortly announce the fifth bi-monthly monetary policy review. RBI governor Shaktikanta Das is scheduled to address the media to announce the decisions taken at 3-day long Monetary Policy Committee (MPC) meeting ended today.

Markets are likely to watch out for the policy review to access the economic situation of the country and the RBI’s projections on growth and Inflation. Several analysts surveyed by “moneycontrol.com” have predicted that RBI will maintain status quo and keep rates steady.

 

The RBI policy is coming at a time when the Indian economy has entered into technical recession and the inflation at six years high at 7.61 per cent. The Indian economy which was contracted record 23.7 per cent in the first quarter, had shrank by 7.5 per cent in the September quarter.

In its last policy review, the RBI had kept Repo rate unchanged at 4 per cent and Reverse repo rate unchanged at 3.35 per cent.

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