Personal Finance

RBI keeps rate unchanged, maintains accommodative stance

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: 

  1. Policy measures – Repo rate kept unchanged at 4%.
  2. GDP – Real GDP expected to contract by 7.5% in FY21.
  3. 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.
  4. 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.
  5. 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.
  6. Outlook
    • 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.

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