RBI keeps Repo rate unchanged

In its policy review meeting, the first meeting after the Union Budget was presented on February 1, the Reserve Bank of India (RBI) has decided to keep key lending rates unchanged.

The six-member monetary policy committee (MPC) headed by RBI Governor Shaktikanta Das kept the Repo Rate unchanged at 4 per cent while maintaining an accommodative stance. Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks. Repo rate is the rate at which the RBI lends to banks,while reverse repo rate is the rate at which it borrows from banks.

The Budget 2021-22 provided strong impetus for the revival, Das said. "The projected increase in Capital expenditure augurs well for capacity creation and crowding-in private investment thereby improving growth prospects," he added.

In his address, RBI governor said that the retail investors can buy government bonds through ‘Retail Direct' which will allow them to open accounts and participate in the primary and secondary G-sec market. "This will make India one of the few countries to allow such access to trading in government securities," he said. Das termed it as "a major structural reform."

As per Das, RBI has projected the CPI inflation at 5.2-5.0 per cent in first half of FY22. "CPI inflation estimate has been revised to 5.2 per cent for Q4FY21," he said.

The RBI had last revised its policy rate on May 22, 2020 in an off-policy cycle to perk up demand by cutting interest rates to a historic low. The central bank has cut policy rates by 115 basis points since February last year.