RBI releases Monetary Policy Report
- Reserve Bank on Friday retained the GDP forecast for the current financial year at 9.5 per cent.
- It also Flagged global semiconductor shortages, elevated commodity prices and potential global financial market volatility as downside risks to economic growth.
- Rural demand is expected to get impetus from continued resilience of the agricultural sector and record production of kharif foodgrains in 2021-22 as per the first advance estimates.
- The policy rate is the key lending rate of the central bank in a country.
- It is a monetary policy instrument under the control of the Central Bank -Reserve Bank of India (RBI) - to regulate the availability, cost and use of money and credit.
- Repo rate is the rate at which the central bank of a country (RBI in case of India) lends money to commercial banks in the event of any shortfall of funds. Here, the central bank purchases the security.
- Reverse repo rate is the rate at which the RBI borrows money from commercial banks within the country.
- RBI kept the policy rate unchanged for the Eighth time in a row maintaining an accommodative stance till the recovery is durable.
- The Policy Repo Rate has been maintained at 4.00 % while Reverse repo rate at 3.35 %.
Monetary Policy Report
- It is published by the Monetary Policy Committee (MPC) of RBI.
- It is a statutory and institutionalized framework under the RBI Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.
Outlook for Growth
- With the ebbing of the second wave, a phased relaxation of the pandemic-related localised restrictions, and improving vaccine coverage, economic activity has been normalising gradually since June 2021.
- Looking ahead, prospects for the agricultural sector and rural demand look promising, supported by the late revival in kharif sowing.
- Urban demand is also likely to accelerate with the release of pent-up demand, aided by the significant expansion in the pace of vaccination.
- RBI has revised the projection for Consumer Price Index (CPI) inflation to 5.3% from 5.7% in August 2021.