Reserve Bank Directions, 2020- Draf...
This notification relates to money market operations. This is the Notification No-FMRD. DRD/202...
The Monetary Policy Committee of the RBI announced that it will keep the status quo in its key rates. It has left the repo rate unchanged at 4%. The Monetary Policy Committee maintains an accommodative stance. This meeting was the second MPC meeting of the FY 2021-22. In this article, we shall take a look at the highlights of the RBI monetary policy 2021.
This monetary policy is formulated by the central bank, i.e., the Reserve Bank of India. It relates to the monetary matters of the country. This policy involves measures that are taken to regulate the supply of money, availability and cost of credit in the economy.
This policy also oversees the distribution of credit among users and borrowing and lending rates of interest. For a developing country like India, the monetary policy is critical for the promotion of its economic growth.
The following announcements were made as part of the RBI monetary policy 2021:
The Monetary Policy Committee decided to maintain an accommodative stance. Here accommodative stance means that there is space for lowering the interest rates in the future to revive growth and demand in the economy.
The MPC decided to continue with this stance until India tackles the impact of the Covid-19 pandemic on our domestic economy. It has to be done to make sure that inflation remains within the target band of RBI.
The GDP of India for the Financial Year 2021 contracted at -7.3%. Although signs of a normal southwest monsoon and global recovery momentum might aid domestic economic activity, the spread of the Covid-19 disease in rural and urban areas continues to pose colossal risk.
The lowering of inflation in the month of April was a relief, but the rising fuel prices might adversely affect the coming days. Keeping these things in mind, MPC observed that the economy requires the policy support.
The monetary policy 2021 meeting lasted for three days. The RBI has kept its policy rates unchanged for the 6th consecutive time, and that too at record lows. The Monetary Policy Committee (MPC) also decided to continue with an accommodative stance to mitigate the impact of Covid-19 on the economy. The Indian economy rose by 1.6% in the Jan-Mar quarter from the previous year. However, it saw a contraction of 7.3% for the entire fiscal year, which is its worst in close to 40 years.
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