Reserve Bank of India (RBI) Governor Shaktikanta Das announced the policy decision today, at the end of the scheduled review of the Monetary Policy Committee (MPC) that began on Monday, amid a surge in coronavirus cases and imposition of new restrictions to curtail the second wave of COVID-19 in India. In its first bi-monthly monetary policy review for the new financial year 2021-22, the Monetary Policy Committee, voted unanimously to keep the policy rate unchanged at four per cent. (Also Read: RBI Keeps Key Rates Unchanged, Says Recovery "Uncertainty" Due To Covid )
As the country stares at another looming economic crisis, led by the steep rise of active COVID-19 cases, the central bank has maintained its status quo on key policy rates for the fifth time in a row. It will maintain its accommodative stance as long as necessary to sustain growth on a durable basis and to mitigate the impact of COVID-19 on the economy. The RBI targeted retail inflation at 5.2 per cent in the first half of the current fiscal and mandated to keep it within the range of two per cent - six per cent band with four per cent as a medium-term target.
The RBI Governor announced a secondary market government securities acquisition programme - G-SAP 1.0, under which it would commit upfront to a certain specific amount of open market bond purchases. The RBI retained its gross domestic product (GDP) growth projection at 10.5 per cent in the current fiscal 2021-22. (Also Read: GDP Growth Projection For FY 2021-22 Remains Unchanged At 10.5%: RBI )
Even as the country has registered more than 8.4 crore COVID-19 vaccine doses cumulatively, as of April 6, yet, partial lockdown in some states and night curfew in the national capital have been announced to prevent the spread of the virus.
Here are the key highlights from today's RBI Governor Shaktikanta Das-led Monetary Policy Committee meeting:
''The downside of the sharper than anticipated recovery has been an abrupt rise in the global commodity prices leading to cost-push pressure on inflation. Though cost push pressure has partially been offset by the normalisation of supply chains, it will remain a driver of future inflation.
While growth outlook and consumer sentiment once again looks somewhat unstable due to the second wave of COVID-19 infections, inflation outlook amidst the bumper food grain production and rising global commodity prices appears to be more evenly balanced. RBI may continue with its accommodative policy stance and maintain status quo on policy rate over the next six to nine months,'' said Dr. Sunil Kumar Sinha, Principal Economist, India Ratings & Research.
RBI Governor-led Monetary Policy Committee said that extension of Held-to-Maturity (HTM) dispensation opens up space for investments of more than Rs 4.0 lakh crore. Shaktikanta Das explained that the central bank will continue to deploy regular operations under liquidity adjustment facility, longer-term repo or reverse repo auctions, forex operations, including special open market operations.
''RBI's intent to continue with easy monetary policy till growth picks up pace, GDP, and inflation trajectory despite COVID-related disruptions is a positive development. Though RBI's view on inflation will have a bearing on the rupee performance in the near term.
''The sharp knee-jerk positive reaction by the bond market after today's monetary policy and related announcements is clearly justified. Against the backdrop of a large government borrowing and renewed uncertainties with fresh surge in Covid infections, a key challenge for the RBI is to maintain orderly conditions in financial markets. Following an intelligently designed borrowing programme announced last week, today's announcement of the G-SAP is particularly important,'' said Siddhartha Sanyal, Chief Economist and Head - Research, Bandhan Bank.
RBI Governor Shaktikanta Das said that the central bank will ensure ample system liquidity in consonance with the accommodative stance of the MPC. Mr Das explained that conducting liquidity management operations is conducive for promoting orderly market conditions, that has yielded dividends. It has facilitated the completion of central and state government borrowing programmes of close to Rs 22 lakh crore at record low costs during 2020-21. It has also facilitated significant amount of private borrowing through corporate bonds, commercial paper, and debentures.
RBI Governor Shaktikanta Das will address a post-policy press conference at 12 noon today. The central bank Governor is expected to address queries related to the bi-monthly Monetary Policy Committee decisions taken today and other key decisions announced by the authority.
The central bank proposed to set up a committee to undertake a comprehensive review of the working of Asset Reconstruction Companies (ARCs) and recommend measures to enable these entities to meet the growing requirements of the financial sector. ARCs play an important role for resolution of stressed sectors.
RBI Governor Shaktikanta Das during the monetary policy review announced that centralised payment systems such as NEFT and RGTS will be extended beyond banks. Additionally, the interoperability among the full-KYC PPIs has been made mandatory, and cash withdrawal by full-KYC PPIs issued by non-bank users has been allowed.
RBI Governor-led Monetray Policy Commitee announced Rs 50,000 crore additional liquidity facility to NABARD, NHB and SIDBI for fresh lending during fiscal 2021-22.
The central bank announced in its monetary policy review to ensure ample liquidity in the system so that the production sector gets adequate credit. RBI Governor Shaktikanta Das announced that Reserve Bank has conducted five open amrket operations in March 2021 to ensure ample liquidity in the market as well.
RBI Governor-led Shaktikanta Das maintained the status quo fifth time in a row on key policy rates and sustained the accommodative stance till economic recovery is achieved.
The Reserve Bank's monetary policy maintained the repo rates - the key interest rates at which the RBI lends money to commercial banks - steady at a 19-year low of four per cent. The reverse repo rate - the rate at which RBI borrows money from banks, was also unchanged at 3.35 per cent.
RBI Governor Shaktikanta Das began addressing the monetary policy statement at 10:00 am on Wednesday, April 7. A post policy press conference will be telecast at 12:00 noon today
In the last bi-monthly meet in February, the central bank expected the gross domestic product (GDP) growth to be at 10.5 per cent in fiscal 2021-22. Experts believe that the Reserve Bank may revise its inflation projections for the new fiscal amid a surge in coronavirus cases due to the second wave of COVID-19 in the country.
In a recent poll by news agency Reuters, 65 of 66 economists surveyed said the RBI's monetary policy committee (MPC) will leave the key policy rates unchanged amid a surge in Covid-19 cases in the country. Similarly, economists surveyed by Bloomberg on Monday expect the six-member MPC to keep the repurchase rate unchanged at four per cent.
Reserve Bank of India (RBI) Governor Shaktikanta Das will deliver the Monetary Policy review statement at 10:00 am today. The central bank Governor will also address a pots-policy press conference at 12 noon