RBI’s MPC starts deliberations on monetary policy

The six-member MPC headed by RBI Governor Shaktikanta Das has started its deliberations.

Mumbai: The Reserve Bank’s rate-setting Monetary Policy Committee (MPC) began its meeting on Wednesday and is likely to hold interest rates and continue with accommodative policy stance so that necessary monetary action could be taken to push growth. This is the first MPC meeting after the presentation of the Union Budget 2021-22.

Although the bi-monthly monetary to be announced on February 5 is likely to refrain from cutting benchmark repo rate, it will ensure availability of adequate liquidity which will be needed to spur investment in the infrastructure sector. The six-member MPC headed by RBI Governor Shaktikanta Das has started its deliberations. After the three-day meeting, resolution of the MPC would be announced on February 5.

The MPC kept the key benchmark rate unchanged in its last three reviews. The current repo rate — rate at which RBI lends to banks — is at a record low of 4 per cent. The reverse repo rate — rate for funds parked by banks with RBI — is 3.35 per cent.

The RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low. The central bank has cut policy rates by 115 basis points since February last year. Experts are of the view that the RBI will refrain from tinkering with the interest rates and keep the monetary stance accommodative at the policy review.