In the first monetary policy of the new financial year, the RBI has kept the repo rate – or the key lending rate – unchanged. “The Monetary Policy Committee voted unanimously to leave the repo rate unchanged at 4 per cent. The MPC also voted unanimously to keep stance accommodative,” RBI governor Shaktikanta Das said in a video address. The real GDP growth for 2022-23 has been projected at 7.2 per cent, he added.
India has kept its key interest rates unchanged for nearly two years now. The repo rate remains unchanged at 4 per cent for the 11th time while the reverse repo rate – or the borrowing rate – remains unchanged at 3.35 per cent.
“Now, two years later as we were emerging out of the pandemic situation, the global economy has seen tectonic shifts beginning February 24 with the commencement of the war in Europe, followed by sanctions and escalating geopolitical tensions,” Das underlined.
“Caught in the cross-currents of multiple headwinds, our approach needs to be cautious but proactive in mitigating the adverse impact on India’s growth, inflation and financial conditions,” he added.
Inflation is expected to rise to 5.7 per cent from 4.5 per cent projected earlier for the current financial year. “Real GDP growth for the year 2022-23 is now projected at 7.2 per cent with Q1 2022-23 at 16.2 per cent, Q2 at 6.2 per cent, Q3 at 4.1 per cent and Q4 at 4 per cent, assuming crude oil that is Indian basket at USD 100 per barrel during the year 2022- 23,” the RBI governor said.
“I am emphasizing on three different aspects which place us in a position that would enable us to deal with the merging crisis and challenges. First, significant improvement in the external sector. Second, Foreign Exchange Reserves which are at very comfortable levels. Third… substantial strengthening of the financial sector,” Das further emphasised.
The central bank said it would restore the width of the liquidity adjustment facility to 50 basis points. “Marginal standing facility, i.e. MSF rate and bank rate remain unchanged at 4.25 per cent. Further, it has been decided to restore the width of liquidity adjustment facilities – the LAF corridor – to 50 basis points. This was the position that prevailed before the pandemic,” the governor added.
Shared edged higher on Friday after the central bank kept its key lending rate unchanged at a record low, news agency Reuters reported.
(With inputs from Reuters, ANI)
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