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Reserve Bank keeps the repo rate stable for the 11th time in a row, reduces GDP estimates, increases inflation

MUMBAI, 8 APRIL (AGENCY)

The Reserve Bank of India (RBI) on Friday kept the key policy rate repo unchanged at a low of 4 per cent for the 11th consecutive time in the first monetary review meeting of the current financial year. Keeping the policy rate unchanged means that there will be no change in the monthly installment of the bank loan. However, the central bank has lowered its gross domestic product (GDP) growth forecast for the current financial year (2022-23) while raising the inflation forecast. Announcing the results of the Monetary Policy Committee (MPC) meeting, Reserve Bank Governor Shaktikanta Das said that the central bank will change its soft stance to keep inflation under control while maintaining economic growth. The Reserve Bank last changed the repo rates on May 22, 2020. Along with this, the central bank has also kept the reverse repo rate unchanged at 3.35 percent. Repo rate is the rate at which the Reserve Bank lends to commercial banks to meet their immediate needs. Whereas under the reverse repo rate, banks get interest on keeping their money with the Reserve Bank. The MPC has reduced the economic growth forecast for the current financial year to 7.2 percent. In the monetary review meeting of February, the MPC had projected the economic growth rate to be 7.8 percent. With this, the central bank has predicted inflation to be at 5.7 percent in the current financial year. Earlier it was estimated to be at 4.5 percent. Governor Das said that the central bank is not bound by any rules. “The Reserve Bank will use all available means to ‘protect’ the economy,” he said. He said that the Indian economy is facing new and huge challenges. He said that the Indian economy has sufficient foreign exchange reserves and the Reserve Bank will work to protect it from all challenges. Das, however, said that the anticipated gains from the weakening of the Omicron wave have been neutralized by heightened geopolitical tensions. The Governor said that the Reserve Bank will review customer services. He also announced to extend the facility of cardless (cardless) withdrawal from ATMs using UPI to all banks.

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