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RBI Monetary Policy | Reserve Bank does not revise repo rate, stays at 4%, lowers GDP growth forecast

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Photo: ANI

Mumbai. The Reserve Bank of India (RBI) on Friday maintained the key policy rate repo at a low of 4% for the 11th consecutive time in the first fiscal review meeting of the current financial year. Keeping the policy rate unchanged means that there will be no change in the monthly installment of the bank loan.

However, the central bank has lowered its Gross Domestic Product (GDP) growth forecast for the current financial year (2022-23), raising its inflation forecast. Announcing the results of the Monetary Policy Committee (MPC) meeting, Reserve Bank Governor Shaktikant Das said the central bank would change its soft stance to keep inflation in check while maintaining economic growth.

The Reserve Bank last revised the repo rate on May 22, 2020. At the same time, the central bank has kept the reverse repo rate unchanged at 3.35 per cent. The repo rate is the rate at which the Reserve Bank lends to commercial banks to meet their immediate needs. Under the reverse repo rate, banks get interest on keeping their money with the Reserve Bank. The MPC has slashed its economic growth forecast for the current financial year to 7.2 per cent.

At its February financial review meeting, the MPC projected an economic growth rate of 7.8 percent. With this, the central bank has forecast inflation at 5.7 per cent for the current financial year. Earlier it was estimated to be 4.5 per cent. Governor Das said the central bank was not bound by any rules. “The Reserve Bank will use all available means to ‘protect’ the economy,” he said.

He said that Indian economy is facing new and huge challenges. He said the Indian economy has ample foreign exchange reserves and the Reserve Bank would work to protect it from all challenges. Das, however, said the expected gains from the weakening of the omicron wave have been neutralized by enhanced geopolitical tensions. The governor said the Reserve Bank would review customer services. He also announced to extend the facility of cardless (cardless) withdrawal from ATMs to all banks using UPI.

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