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RBI Monetary Policy: Rates unchanged, Das says growth good but economy needs support

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RBI Monetary Policy: Rates unchanged, Das says growth good but economy needs support

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RBI governor Shaktikanta Das on Wednesday said the Monetary Policy Committee of the central bank has decided to leave the repo rate unchanged at 4 percent. The reverse repo rate has been maintained at 3.35 percent.

RBI Monetary Policy: Rates unchanged, Das says growth good but economy needs support
The Reserve Bank of India's (RBI) Monetary Policy Review Committee on Wednesday voted to keep benchmark signalling rates unchanged, while maintaining its ‘accommodative’ stance.
An accommodative stance means that the RBI will cut rates to inject money into the financial system whenever needed.
The repo rate stands unchanged at 4 percent, the reverse repo rate at 3.35 percent, the marginal standing facility and the bank rate have been maintained at 4.25 percent.
RBI Governor Shaktikanta Das said the country was better prepared to deal with economic disruption from COVID. He said that in several sectors, the pre-pandemic levels of output had been surpassed, but also said that the economy is not yet strong enough for self-sustaining growth and so would need policy support for some more time. The RBI retained its GDP growth forecast at 9.5 percent for the current fiscal (2021-22).
Das said prospects of economic activity were steadily improving and that various factors coming together would ease the inflationary pressures in the economy.
He said that private consumption was still below pre-pandemic levels, but on the positive side, corporate balance sheets were in a much better shape because of reduction in debt. Also, the government’s focus on capex was likely to attract investment by private sector firms as well.
Das said that latest data points indicated consumption demand was improving, and that urban demand too was strengthening.
He said that persistence of high core inflation (excluding food and fuel) was an area of concern, and that headline inflation number for the rest of the year would be high because of base effect.
Das said all components of GDP registered an year-on-year growth in the second quarter. He said recent reductions in excise duty, and Value Added Tax should support demand by increasing purchasing power.
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