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RBI MONETARY POLICY OCTOBER 2021

RBI MONETARY POLICY OCTOBER 2021

Context:

On 8th Oct 2021, the Reserve Bank of India (RBI)’s three-membered Monetary Policy Committee (MPC) made some announcements. MPC kept the repo rate unchanged at 4%, in order to revive & sustain growth and reduce the impact of the Covid-19 pandemic.

Key Highlights:

  • This is the 8th time in a row that the MPC headed by RBI Governor Shaktikanta Das has maintained the status quo.
  • RBI had last revised its policy repo rate or the short-term lending rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
  • According to RBI Governor, high-frequency indicators indicate that economic activity has gained momentum.
  • Core inflation is still sticky.
  • In July-September, CPI inflation was lower than expected. At present, India is in a much better place as compared to the last MPC meeting.
  • The reverse repo rate was also kept as earlier at 3.35%.
  • Marginal Standing Facility (MSF) rate and bank rate also remain unchanged at 4.25%.

Monetary Policy Committee:

  • It is responsible for fixing the benchmark interest rate in India.
  • The meetings of the MPC are held at least 4 times a year and it publishes its decisions after each such meeting.
  • It was founded on 27 June 2016.

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