The RBI kept the repo rate unchanged at 4% for the third time in a row while maintaining its accommodative policy stance.
A few key highlights are appended for your ready reference:
- Policy measures – Repo rate kept unchanged at 4%.
- GDP – Real GDP expected to contract by 7.5% in FY21.
- Inflation – Expects inflation to remain above the upper threshold of the Monetary Policy Committee’s (MPC) target for Q3FY21 at 6.8% and then decelerate to 5.8% in Q4FY21.
- Stance – RBI continued with its accommodative policy stance. It also emphasized that the stance will be maintained this year and in the next financial year, to ensure a “durable improvement” in growth.
- Other measures
- RBI will maintain significant liquidity support and macroprudential measures to support financial markets and aid growth.
- The on-tap Targeted Long-Term Repo Operation (TLTRO) facility for corporates has been extended to other stressed sectors in sync with the government’s credit-guarantee scheme.
- RBI is concerned that rising oil prices and cost-push pressures could accelerate core inflation.
- Inflation continues to remain sticky and growth recovery is still at a nascent stage.
- In the above backdrop, we believe that the RBI is going to be on an extended pause.
Stay safe & Healthy.
Categories: Personal Finance