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Repo rate remains unchanged at 4%; GDP growth projection for FY 2021-22 retained at 9.5%

CPI Inflation expected at 5.7% for FY 2021-22

Consumption, Investment, External demand on the path of regaining traction

2 more auctions of Rs 25,000 Crores under G-SAP 2.0 in August 2021: RBI

Consumer Confidence Survey suggests one year ahead sentiments return to optimistic territory

Mumbai, 06th August 2021

Policy Repo Rate will remain unchanged at 4%; Marginal Standing Facility (MSF) Rate and Bank Rate will remain unchanged at 4.25% and also Reverse Repo Rate also will remain unchanged at 3.35%. Governor of the Reserve Bank of India, Shri Shaktikanta Das announced this during his Monetary Policy Address today. He also mentioned that the Monetary Policy Committee has unanimously voted to leave Policy Repo Rate unchanged (4%) in order to continue with the accommodative stands to revive growth and continue to mitigate the impact of COVID-19 Pandemic.

 “Today we are in a much better position than at the time of meeting of the MPC in June 2021,” said Shri Das. The Governor was optimistic about the evolving economic activities in the country with the COVID-19 second wave receding and went on to say that the activities are on the lines of MPC's expectation in June. “High frequency indicators which are also considered to be the three aspects of growth - Consumption (both Private and Government), Investment and External demand are all on the path of regaining traction,” he added. Shri Das also informed about the Reserve Bank's consumer confidence survey that suggests one year ahead sentiments returning to an optimistic territory.

Growth Rate retained at 9.5%; Inflation projected at 5.7%

Governor informed that, the real Gross Domestic Product (GDP) is retained at 9.5% in 2021-22. He explained that the global commodity prices and financial market volatility, together with vulnerability to new waves of infections are downside risks to economic activity

GDP growth projection for FY 2021-22 retained at 9.5

Quarterly Breakup:

  • For Q1 -  21.4 %
  • For Q2 - 7.3 %
  • For Q3 - 6.3 %

Consumer Price Inflation is projected at 5.7% during FY 2021-22

Quarterly Breakup:

  • For Q2 -  5.9 %
  • For Q3 - 5.3%
  • For Q4  - 5.8%

RBI’s Additional Measure to Mitigate Pandemic Impact:

The Governor informed about the various measures taken by the RBI to mitigate the impact of the COVID-19 Pandemic. “After the onset of Pandemic, RBI has announced more than 100 measures,” he stated. He also informed about RBI’s proposals to conduct two more auctions of Rs 25,000 Crores under G-sec Acquisition Programme (G-SAP 2.0) on 12th August and 26th August, 2021. “G-SAP has been successful in anchoring yield expectation while eliciting keen response from market participants,” he added.

Following are the additional measures announced by the Governor in his Monetary Policy Address:

  1. On-tap TLTRO Scheme: Extension of Deadline: from September 30, 2021 till December 31, 2021
  2. Marginal Standing Facility (MSF): Extension in Period of Relaxation: from September 30, 2021 till December 31, 2021
  3. LIBOR Transition-Review of Guidelines – Export Credit in Foreign Currency

and Restructuring of Derivative Contracts

“RBI  is taking measures in consultation with Banks and market bodies to ensure that the transition away from London Inter Bank Offered Rate LIBOR is orderly and not disruptive” – RBI Governor

  1. Deferral of Deadline for Achievement of Financial Parameters under Resolution Framework 1.0: from March 31, 2022 to October 1, 2022.
  • The Monetary Policy statement can be read here
  • Watch RBI Governor’s Address here
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