RBI Governor Shaktikanta Das-led Monetary Policy Committee on Friday kept the key interest rates steady as widely expected, citing inflation concerns. However, The RBI will ensure ample liquidity for stressed sectors, in order to keep the nascent economic recovery on track, Mr Das said in an online briefing. Mr Das stated that the economy is reviving faster than expected from the contraction due to COVID-19, but warned that signs of recovery were far from being broad-based. (Also Read: "Faster Recovery Than Expected": RBI Ups GDP Forecast From -9.5% To -7.5%)
Here are five key takeaways of the RBI's latest policy review:
GDP Projection
The central bank revised its projection for real gross domestic product (GDP) growth at -7.5 per cent in financial year 2020-21, from -9.5 per cent. "The second half of 2020-21 is expected to show some positive growth," said RBI Governor Shaktikanta Das.
Accommodative Stance
The RBI Governor said the central bank will continue with its "accommodative" policy stance at least for the current financial year and into the next to revive growth on a durable basis while ensuring that inflation remains within the target.
Inflation Outlook
The RBI was forced to raise its inflation outlook as heightened food prices pushed consumer price index (CPI) inflation sharply to 7.3 per cent in September and further to 7.6 per cent in October. “The outlook for inflation has turned adverse relative to expectations in the last two months. Taking into consideration all these factors, CPI inflation is projected at 6.8 per cent for Q3, 5.8 per cent for Q4; and 5.2 to 4.6 per cent in H1FY22, with risks broadly balanced,'' said the RBI.
RTGS To Be 24X7
After NEFT, the RBI said it will make real time gross settlement (RTGS) facility, used to transfer large amounts, 24x7 soon. This will make the payment ecosystem more efficient. "With this enablement, it is proposed to reduce settlement and default risk in the system by facilitating settlement of AePS, IMPS, NETC, NFS, RuPay, UPI transactions on all days of the week, instead of five days earlier,'' said RBI Governor Shaktikanta Das.
More Sectors Covered Under Liquidity Operations
The RBI decided to include more sectors in the Targeted Long-Term Repo Operations (TLTRO) scheme that was announced after the last policy meets in order to build synergy with the government's emergency credit guarantee scheme. This will encourage the banks to extend credit support to more stressed sectors at a lower cost and will contribute to fuel growth.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
