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MPC meet Live Updates: RBI keeps repo rate unchanged; maintains 'accommodative' stance

RBI Governor Shaktikanta Das says MPC voted unanimously to keep policy repo rate unchanged at 4 per cent; changes its FY21 real GDP target to 7.5 per cent as compared to 9.5% contraction projected earlier

twitter-logoBusinessToday.In | December 4, 2020 | Updated 12:42 IST
MPC meet Live Updates: RBI keeps repo rate unchanged; maintains 'accommodative' stance
RBI Governor Shaktikanta Das

The RBI's Monetary Policy Committee , led by Governor Shaktikanta Das, has announced the central bank's policy stance amid high inflation concerns. The apex bank has kept the policy stance 'accommodative' as per its resolution during the previous MPC meet announcement and kept the key lending repo rate unchanged."MPC decided to continue with accommodative stands of monetary policy as long as necessary, at least till current financial year & into next year to revive growth on a durable basis & mitigate the impact of COVID-19 while ensuring that inflation remains within target," says the RBI Governor.

The key policy rate has remained at 4 per cent since May after it was cut 115 basis points since March when Covid-19 induced lockdowns were imposed. In today's announcement, markets will most likely look at what the MPC has to say on its earlier resolve to keep the 'accommodative' stance "at least during the current financial year and into next financial year".

Check out the latest updates on RBI's MPC meet announcements on BusinessToday.In Live blog

10.30 AM: RBI governor on economic recovery signs

  • RBI Governor says the Indian economy is in the recovery mode and is entering a "decisive" phase.
  • The RBI Governor says India has been able to arrest near-term financial risks amid the coronavirus pandemic.
  • He says the rural economy has shown resilience and economic constraints have started to ease as the activity goes back to normalcy.

10.28 AM: The RBI governor says the central will keep the policy stance "accommodative" as long as necessary.

10.25 AM: The RBI changes its FY21 real GDP target to 7.5 per cent as compared to 9.5% contraction projected earlier

10.18 AM: Check out latest visuals from RBI Governor's presser on MPC meet announcements.

10.17 AM: The RBI to maintain accommodative monetary policy stance to support growth, keep inflation at targeted level.

10. 15 AM: "MPC decided to continue with accommodative stands of monetary policy as long as necessary, at least till current financial year & into next year to revive growth on a durable basis & mitigate the impact of COVID-19 while ensuring that inflation remains within target," says the RBI Governor.

10.12 AM: The Marginal Standing Facility (MSF) rate and the bank rate also remain unchanged at 4.25%. The reverse repo rate remains unchanged at 3.35%.

10.07 AM: RBI Governor Shaktikanta Das says Monetary Policy Committee (MPC) was of the view that inflation is likely to remain elevated with some relief in the winter months from prices of perishables and bumper Kharif arrivals.

10.05 AM: Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate unchanged at 4 per cent: RBI Governor Shaktikanta Das.

10.00 AM: Repo rate and reverse repo rate kept unchanged. RBI keeps the policy stance accommodative.

Inflation has been on a higher trajectory for quite some time. It has overshot the RBI's tolerance level of 6 per cent for seven months now. It is expected the apex bank will take steps to fasten India's economic recovery after the coronavirus, but high inflation will most likely force it to keep the rates unchanged.

Retail inflation, calculated based on the Consumer Price Index (CPI), rose to 7.61 per cent in October on the back of increasing food prices. It is the highest level of retail inflation since May 2014 when the inflation level was at 8.33 per cent.

Also read: Q2 GDP growth shows surprising resilience: Is worst over for Indian economy?

The RBI had earlier projected the CPI-based inflation at 6.8 per cent for Q2 and 5.4-4.5 per cent for H2 of FY21. Experts believe the central bank could revise its forecast now.

The RBI has something to cheer about when it comes to GDP growth though. While the economy contracted for the second successive quarter, declining 7.5 per cent year-on-year, there was something to cheer about. The GDP grew at 23.2 per cent sequentially signalling a gradual rebound in the economy after 24% contraction in the quarter ending June.

It also remains the best quarter-on-quarter growth since 1996 when the country started giving out quarterly numbers. The current GDP numbers are even better than the ones based on the RBI's recent "nowcast" model.

With the rate cuts unlikely, the RBI may also hint at withdrawal of its post-Covid emergency stance by announcing some measures to absorb excess liquidity from the system.

Also read: Centre's expenditure 240% of total income so far; fiscal deficit widening

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