The Monetary Policy Committee of RBI kept the Repo rate unchanged at 4 per cent. The repo rate is kept unchanged for the 7th consecutive time. Other major rates like Reverse Repo Rate, Bank Rate, MSF, CRR, SLR have also been kept unchanged. In a statement, Governor Shaktikanta Das said, The MPC has also decided on a 5 to 1 majority to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy.
Mr Das said, inflation may remain close to the upper tolerance band up to Q2 of 2021-22, but these pressures should ebb in Q3 of 2021-22 on account of kharif harvest arrivals and as supply side measures take effect. Mr. Das added, taking into consideration all these factors CPI inflation is now projected at 5.7 per cent during 2021-22.
The Governor said, Reserve Bank through its market operations, both conventional and unconventional, has maintained ample surplus liquidity since the onset of the pandemic to ensure easing of financial conditions in support of domestic demand. RBI has decided to conduct fortnightly variable rate reverse repo (VRRR) auctions of 12 lakh crore in the month of August and September 2021. He clarified that These enhanced VRRR auctions should not be misread as a reversal of the accommodative policy stance, as the amount absorbed under the fixed rate reverse repo is expected to remain more than 4 lakh crore rupees at the end and of September 2021.
In a concluding statement RBI Governor Shaktikanta Das has said, the recovery remains uneven across sectors and needs to be supported by all policy makers.
The Reserve Bank remains in “whatever it takes” mode, with a readiness to deploy all its policy levers – monetary, prudential or regulatory. Our focus on preservation of financial stability continues. At this juncture, our overarching priority is that growth impulses are nurtured to ensure a durable recovery along a sustainable growth path with stability.
Reacting on RBI’s Monetary Policy review, Chief Economist of Bandhan Bank, Mr. Siddhartha Sanyal said While the status quo on rates with a 6-0 voting and continued “accommodative” stance were on expected lines, the split voting as regards the policy stance was a modest surprise. Still, the overall tone of policy continued to focus clearly on supporting growth recovery.