RBI POLICY REVIEW

  • December 4, 2020
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Subject: Economy

Context: The Monetary Policy Committee (MPC) of the Reserve Bank of India on Friday decided to keep repo rate unchanged at 4 per cent. The reverse repo rate stays at 3.35 per cent. The RBI last changed policy rate on May 22.

Concept:

  • The key lending rate of the RBI or the repo rate was left unchanged at 4% while the reverse repo rate, or the rate the RBI pays when funds are parked with it, stayed at 3.35%.
  • The RBI has also projected the ongoing GDP contraction to narrow to 7.5% this fiscal with the economy returning to growth of 0.1% in Q3 and expanding 0.7% in Q4 of FY21.
  • Governor Shaktikanta Das, while announcing the policy, said inflation still remains a concern as RBI sees core inflation remaining sticky. He projected retail inflation to average 6.8% in Q3, before moderating to 5.8% in Q4.
  • The RBI also announced a host of measures for liquidity management and to deal with exchange rate risks.
economy RBI POLICY REVIEW