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RBI retains accommodative stance, rates
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SME Times News Bureau | 07 Apr, 2021
To support a faster economic recovery amid a resurgence in Covid-19
cases, the Reserve Bank retained its key short-term lending rates along
with the growth-oriented accommodative stance during the first monetary
policy review of FY22.
Accordingly, the Monetary Policy
Committee (MPC) of the central bank voted to maintain the repo rate, or
short-term lending rate, for commercial banks, at 4 per cent.
Likewise,
the reverse repo rate was kept unchanged at 3.35 per cent, and the
marginal standing facility (MSF) rate and the 'Bank Rate' at 4.25 per
cent.
In a virtual address after the Monetary Policy Committee's
bi-monthly meet, RBI Governor Shaktikanta Das said that the growth rate
forecast has been retained at 10.5 per cent.
Besides, he said
India's GDP is expected to grow on the back of accelerated anti-Covid
vaccination drive as well as gradual release of pent up demand.
However, he warned against the resurgence of Covid-19 infections and high commodity prices.
Furthermore, RBI has pegged retail inflation for the April-June quarter of the current financial year at 5.2 per cent.
According to Das, the evolving CPI inflation trajectory is likely to be subjected to both upside and downside pressures.
"The
bumper foodgrains production in 2020-21 should sustain softening of
cereal prices going forward, while the prices of pulses, particularly
tur and urad, remain elevated, the incoming rabi harvest arrivals in the
markets and the overall increase in domestic production in 2020-21
should augment supply which, along with imports, should enable some
softening of these prices going forward," he said.
The RBI
Governor cited that while edible oils inflation has been ruling at
heightened levels with international prices remaining firm, reduction of
import duties and appropriate incentives to enhance productivity
domestically could work towards a better demand-supply balance over the
medium-term.
Suggesting that the states and the Centre should
take steps to control the rising fuel prices, Das said: "Pump prices of
petroleum products have remained high. Reduction of excise duties and
cesses and state level taxes could provide some relief to consumers on
top of the recent easing of international crude prices. This could slow
down the propagation of second round effects."
The impact of high
international commodity prices and increased logistics costs are being
felt across manufacturing and services, he added.
Finally,
inflation expectations of urban households one year ahead showed a
marginal increase over the three months ahead horizon according to the
RBI's March 2021 survey.
"Taking into consideration all these
factors, CPI inflation is now projected as 5.0 per cent in Q4:2020- 21;
5.2 per cent in Q1:2021-22, 5.2 per cent in Q2, 4.4 per cent in Q3 and
5.1 per cent in Q4, with risks broadly balanced."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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