New Delhi: The Reserve Bank of India (RBI) is expected to maintain a status quo on key rates in its bi-monthly policy review on Wednesday amidst the looming scare of Omicron, a new strain of Coronavirus.
Reserve Bank’s rate-setting panel started its three-day deliberations on the monetary policy on Monday. The decision of the six-member Monetary Policy Committee (MPC) would be announced at 10 am by RBI Governor Shaktikanta Das.
In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times. The repo rate, at which the RBI lends short-term funds to banks, was kept unchanged at 4 per cent. The reverse repo rate, at which the RBI borrows from banks, was kept unchanged at 3.35 per cent. The Marginal Standing Facility (MSF) rate was also kept unchanged at 4.25 per cent.
The last time the RBI changed the policy rate was in May 2020. The central bank had slashed the key policy rates in May 2020 to historic lows to support the economy hit by the Covid-19 pandemic. Since then the RBI has maintained the status quo.
However, during this period the Indian economy has been on a roller coaster. During April-June 2020 quarter, a period when the RBI last changed policy rates, India`s GDP slumped by 24.4 per cent. The economy posted a growth of 20.1 per cent during April-June 2021 quarter. The GDP posted a growth of 8.4 per cent in July-September 2021 quarter as against a contraction of 7.4 per cent in the year-ago period.
There has been a wide fluctuation in inflation also. However, the RBI has maintained a `wait and watch” approach as these fluctuations have been guided by factors largely beyond its control.
