The Reserve Bank of India plays a crucial role in the development of the country. They are the only entity to frame and exercise the monetary policy for the country. The Monetary Policy Committee on 8th December 2021 published the repo rate and other key lending rates. Shaktikanta Das the governor of RBI said that the central bank will maintain an “Accommodative” stance with the appearance of a new Covid-19 variant (Omicron) around the world. Repo Rate and Reverse Repo Rate The monetary policy committee (MPC) of the RBI will retain the key lending rate, or repo rate, at 4%. The reverse repo rate was likewise held steady at 3.35 per cent. MSF and Bank Rate The bank rate and the marginal standing facility (MSF) rate both stayed at 4.25 per cent. The interest rate at which the Reserve Bank of India lends money to scheduled commercial banks that are experiencing severe liquidity shortages is known as the marginal standing facility rate. GDP Forecasting In terms of the economy, The RBI Governor stated that the real GDP growth forecast remains at 9.5 per cent. The RBI, on the other hand, lowered its GDP growth forecast for Q3FY22 from 6.8% to 6.6 per cent. In addition, Q4FY22 GDP was reduced to 6% from 6.1 per cent previously. For Q1FY23, real GDP growth is expected to be 17.2%, while for Q2FY23, it will be 7.8%. Inflation In terms of inflation, the governor of the Reserve Bank of India stated that the FY22 CPI inflation target of 5.3 per cent is unchanged. This includes 5.1% in Q3FY22 and 5.7% in Q4FY22, with risks broadly balanced. The RBI Governor also added that the current fiscal year's headline inflation would peak in the fourth quarter. Thank you.
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