RBI Monetary Policy Committee Meeting- Key Highlights

February 5, 2021

The Monetary Policy Committee of the central bank recently held its meeting on February 3 to February 5, 2021 to discuss the current macroeconomic financial developments in India.

Key Decisions by the committee

The committee has decided to keep the repo rate unchanged at the 4 percent.
It has decided to continue its accommodative stance in accordance with the necessities in the current financial year.
The accommodative stance will continue into the next financial year as well so as to revive the growth and to keep inflation within the set target.
Marginal standing facility rate is also unchanged at 4.25%.
The committee has also kept the bank rate unchanged at 4.25 percent.
The reverse repo rate is also same at 3.35 percent as earlier.

Highlights

The committee highlights that, the Inflation in last two months was better than expected. Inflation has come down to the Upper tolerance level of 6 percent for the first time since covid-19 pandemic breakdown.
Committee also highlights that, factors that could change the food inflation trajectory include the Good Rabi Crop, Huge Kharif harvest, huge winter supplies of vegetables and soft poultry demand.
The committee has projected the real GDP growth at 10.5 percent in 2021-22.

Is economy recovering?

The Governor of the reserve Bank of India noted that there are signs of recovery. These signs have strengthened since the last meeting of the MPC. He highlighted,

There is improvement in the capacity utilisation of the manufacturing sector to 63.3 percent.
He confidence of the consumer is also reviving.
The business expectations in the manufacturing, services and infrastructure sectors are also strengthening.
Domestic trading activities is growing along with the movement of goods and people.

In the line, COVID-19 vaccination drive will further boost the restoration of the other contact intensive sectors which in turn will help in reviving the economy.

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