RBI has been ordered by the Center to keep inflation in the range of 2-6 per cent.
New Delhi:
The Reserve Bank of India (RBI) on Friday kept the repo rate unchanged at 4 per cent for the 11th consecutive time. The reverse repo rate has also been kept unchanged at 3.35 per cent. This is the first bi-monthly policy for the current financial year 2022-23.
RBI said it will restore the width of the liquidity adjustment facility to 50 basis points (bps).
RBI Governor Shaktikanta Das said the expected gains from the volatility of the Omicron wave are offset by an increase in geopolitical tensions. “The economy is facing new and enormous challenges. The situation in Europe (Russian-Ukraine conflict) can derail the global economy,” Das said.
Real GDP growth for 2022-2023 is projected at 7.2 percent, up from the previous 7.8 percent; The RBI governor further said, while retail inflation is estimated at 4.5 per cent to 5.7 per cent for FY13.
The repo rate is the rate at which a central bank lends money to banks, and the reverse repo rate is the rate at which it borrows from commercial lenders.
The RBI has kept the key repo rate at record levels since May 2020 and has repeatedly reiterated that it will continue to support economic growth.
The government has ordered the central bank to keep inflation in the range of 2-6 per cent.
Retail inflation rose to 6.07 per cent in February, surpassing the upper limit of the RBI’s target range. RBI primarily factors in retail inflation while arriving at its bi-monthly monetary policy.
Meanwhile, domestic indices opened on a bullish note with focus on the Reserve Bank’s decision.