The Monetary Review Committee (MPC) of the Reserve Bank (RBI) has retained the repo rate at 4% and the reverse repo rate at 3.35%. RBI Governor Shaktikanta Das said that the threat of corona is not over yet. We need to be cautious against the third wave.
Mumbai . The Monetary Review Committee (MPC) of the Reserve Bank (RBI) has not made any change in interest rates. RBI has retained the repo rate at 4% and the reverse repo rate at 3.35%. Out of the 6-member committee, 5 members voted in its favor. Das said that the threat of corona is not over yet. We need to be cautious against the third wave.
Reserve Bank Governor Shaktikanta Das said the policy approach would still remain “accomodative”. The “accomodative” stance means that the focus of the RBI will be on growing the economy by keeping the rate low.
Economy Growth As Expected According to the
MPC, the economy growth is good. It is getting support from increasing vaccination. However, inflation increased in June. In such a situation, policy support is needed for growth. The governor said that our focus is on improving supply and demand. The Reserve Bank has also retained its estimate for the financial year 2021-22, which is 9.5%.
Das said that the economy is recovering from the second wave of coronavirus infection. With the increase in vaccination, the pace of economic activities is also increasing.
VRRR Auction
Shaktikanta Das said – VRRR will auction to increase demand. More than 4 lakh crores will be auctioned through VRRR. Das said that we are continuously taking various measures to increase the demand in the economy. Will continue to buy bonds through G-sec 2.0. Bond purchases will continue through different auctions.
G-SAP Auction on 12th and 26th August
Das said that G-SAP auction will be held on 12th and 26th August. Also, RBI has extended the date of TLTRO scheme till 31st December. It was extended for another 3 months.
The Monterey policy is reviewed once every two months. The policy rate has been announced today after the meeting of the Monetary Policy Committee for three days. Most economists expected the repo rate to be retained at 4% as before.
What is Repo Rate?
Repo rate is the rate at which RBI lends money to commercial banks when needed and RBI uses it as a tool to control inflation. On the other hand, reverse repo rate is the rate at which RBI borrows from banks.
