Explained: What RBI keeping rates unchanged means for you

RBI Keeps Key Interest Rates Unchanged: The MPC has decided to continue with the accommodative stance as long as necessary to revive and sustain growth.

RBI Keeps Repo Rates Unchanged: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday kept the key interest rates unchanged and reduced the inflation target for the year 2021-22.

Latest stance of RBI: Interest rates in the banking system are expected to remain steady as the Repo Rate remains unchanged at four per cent, Reverse Repo rate at 3.35 per cent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 4.25 per cent. The MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of Covid-19 on the economy.

RBI inflation forecast: The RBI has slashed the inflation forecast for 2021-22 to 5.3 per cent from 5.7 per cent estimated earlier. Going forward, the inflation trajectory is set to edge down during Q3 of 2021-22, and several evolving factors provide comfort on the food price front. Its momentum is expected to remain muted in the near term, it said.

Growth forecast: The RBI has retained the projection for real GDP growth at 9.5 per cent in 2021- 22 consisting of 7.9 per cent in Q2 of the current year. “Almost all components of GDP registered year-on-year growth, despite a sharp loss of momentum due to the second wave. Recovery in aggregate demand gathered pace in August-September,” the RBI said.

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