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Current Affairs

RBI’s monetary policy changes

Date: 07 August 2021 Tags: Monetary Policy & RBI

Issue

RBI’s Monetary Policy Committee (MPC) has decided to keep Repo rate unchanged at 4 percent. This is 7th time in a row repo rates have not been changed.

 

Details

  • The reverse repo rate has been fixed at 3.35 percent and the inflation target has been raised to accommodate global situation.

  • The panel has maintained growth forecast of 9.5 percent. The move was necessitated due to high inflation level and delayed recovery.

  • The interest rates are also expected to remain stable until the next revision that will take place after next couple of months.

 

Inflation target

  • The earlier projection was 5.1 percent. It has now been raised to 5.7 percent. This is lower than the upper limit of 6 percent imposed by RBI.

  • The CPI inflation for Q2 is expected to be 5.9 per cent, 5.3 in Q3 and 5.8 percent in the Q4 of the 2021-22.

 

Monetary Policy Committee

  • Monetary Policy Committee is a group that fixes benchmark interest rate in India. The meetings of the committee are held atleast four times in a year.

  • Three officials of the Reserve Bank of India and three members nominated by the Indian government are the members of the committee.

  • The decisions are based on majority opinion. The government has a casting vote if there is a tie during voting.