RBI Governor Shaktikanta Das has already promised more policy measures, if necessary, to support the economy.
RBI Governor Shaktikanta Das said today that the country’s economy is likely to contract 9.5 percent in the current financial year, “with downside risks,” while maintaining a status quo in rates. policy citing high inflation. GDP may emerge from the coronavirus-induced contraction and turn positive by the fourth quarter of 2020, Governor Das said. The Monetary Policy Committee, whose three new external members voted on today’s political action, unanimously favored keeping the repurchase rate at the existing 4 percent, maintaining an “accommodative” stance, ruling out any increase for the time being.
Here are 10 things to know:
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The Monetary Policy Committee kept the buyback rate, or the key interest rate at which it lends short-term funds to commercial lenders, at 4.0 percent. Consequently, the reverse repurchase rate, at which the RBI borrows from lenders, stood at 3.35%.
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That was in line with the expectations of economists. All 66 respondents in a Reuters news agency poll had predicted a status quo in the buyback rate.
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A large majority in that survey did not see cuts until the fourth quarter (January-March) of the current financial year.
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The central bank maintained its “accommodative” stance on monetary policy to support the coronavirus-hit economy, ruling out a hike for now.
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The RBI projected that the country’s GDP or gross domestic product will contract 9.5 percent in the current financial year, which ends in March 2021. However, it added that “a faster and stronger rebound is eminently feasible. “if the current recovery momentum gains ground.
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The RBI governor said inflation is likely to remain high in September and decline in the third and fourth quarters of the current financial year.
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Governor Shaktikanta Das said the country is entering a decisive phase in the fight against the pandemic. “In relation to pre-COVID levels, several high-frequency indicators point to the relaxation of contractions in various sectors … and the appearance of growth impulses … By all indications, the deep contractions in Q1 have remained back, “he added. He said.
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On the current coronavirus crisis, Das said that “rays of light are visible in the flattening of the burden curve of active cases across the country … Barring the incidence of a second wave, India is prepared to ignore of deadly virus control and renew “. your appointment with your pre-COVID growth trajectory. “
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The RBI chief also said that food grain production was set at record levels, and factories and cities were coming to life. “Against all odds, we will fight and revive,” Das said in conclusion.
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The RBI has already cut the buyback rate by 115 basis points (bps) since the end of March. The last meeting of the Monetary Policy Committee, which has three new external members who voted on today’s decision, was originally due to wrap up on October 1.
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