The Reserve Bank of India (RBI) is likely to keep key policy rates unchanged in its monetary policy review on Thursday.
This is the first monetary policy to be announced after the presentation of the Union Budget 2022-23. Repo is the rate at which RBI lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation.
The reverse repo rate is the rate at which the RBI borrows from banks. The repo rate currently stands at 4 percent while the reverse repo rate is at to 3.35 percent. These policy rates have remained unchanged since May 2020.
The six-member Monetary Policy Committee headed by Reserve Bank of India Governor Shaktikanta Das started deliberations on the bi-monthly policy review on Tuesday.
The meeting was originally scheduled to take place 7-9 February, but was rescheduled to 8-10 February after Maharashtra Government declared February 7 a public holiday to mourn the death of legendary singer Lata Mangeshkar.
This policy review is particularly important as it comes just nine days after the 2022 budget announcements. This is the last policy review of the financial year 2021-22.
RBI has not changed key policy rates for over one-and-a-half years. The last time the RBI changed policy rate was in May 2020 when it had slashed the key interest rates to a historic low to support the economy ravaged by the COVID-19 pandemic.
In the last policy review announced on December 8, 2021, the Monetary Policy Committee took a unanimous decision to maintain the status quo on policy rates. The committee had also decided to maintain an “accommodative policy stance.