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 six-member MPC, headed by RBI governor Shaktikanta Das, met for three days from February 8.
“Overall, taking into consideration the outlook for inflation and growth, in particular the comfort provided by improving inflation outlook, the uncertainties related to Omicron and global spillovers, the MPC was of the view that continued policy support is warranted for a durable and broad-based recovery,” RBI governor Shaktikanta Das said in his address.
Here are the key takeaways:
Benchmark rates unchanged for 10th straight time
* Both repo and reverse repo rates were kept unchanged at 4 per cent and 3.5 per cent, respectively.
* RBI decided to continue with its accommodative stance in the backdrop of an elevated level of inflation.
* Das said MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target.
Real GDP growth for FY23 at 7.8%
* For fiscal year 2022-23, real GDP has been projected at 7.8 per cent
* For current fiscal year RBI projected real GDP growth of 9.2 per cent and expects that it will take economy above pre-pandemic level.
* “India is charting a different course of recovery from rest of the world. India poised to grow at fastest pace year-on-year among major economies as per projections by IMF. This recovery is supported by large scale vaccination & sustained fiscal & monetary support,” Das said.
* Budget 2022 projected a nominal gross GDP of 11.1 per cent for FY23
Inflation projection retained at 5.3%
* For the current fiscal year, RBI retained its retail inflation projection at 5.3 per cent.
* Retail inflation rose to a five-month high of 5.59 per cent in December from 4.91 per cent in November, mainly due to an uptick in food prices.
* MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
The meeting was to start on Monday but it was postponed by a day in view of Maharashtra declaring public holiday on February 7 to mourn the death of legendary singer Lata Mangeshkar.
The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The last MPC held in December 2021 had kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance against the backdrop of concerns over the emergence of the new coronavirus variant Omicron.
The MPC assumes importance as it comes days after finance minister Nirmala Sitharaman presented the Union Budget 2022.
The budget has pegged the Centre’s gross borrowing at a record Rs 14.3 lakh crore and for the FY22 at Rs 10.5 lakh crore, lower than Rs 13.5 lakh crore this fiscal, while together with the states, the gross borrowing will be Rs 23.3 lakh crore and net will be Rs 17.8 lakh crore. The budget seeks to pay back Rs 3.1 lakh crore next fiscal, up from Rs 2.7 lakh crore this fiscal.
(With inputs from agencies)