RBI's Monetary Policy Statement February 2022
On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting decided to:
- Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent.
- The Marginal Standing Facility (MSF) rate and the Bank rate remain unchanged at 4.25 per cent.
- The reverse repo rate also remains unchanged at 3.35 per cent.
- The MPC flagged the potential downside risks to economic activity from the highly contagious Omicron variant.
- These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent while supporting growth.
The Meeting of the Monetary Policy Committee (MPC) was held from 8,9th and 10th February 2022.
What Is Monetary Policy Committee?
- MPC is a government-constituted body of the RBI, which is responsible for framing the monetary policy of the country, using the tools like repo rate, reverse repo rate, bank rates etc.
- The MPC has six members, three nominated by the government and three members of RBI.
- The RBI Governor is the ex-officio chairperson of the committee.
- MPC usually meets six times a year and has and each member has a tenure of four years.
- MPC decisions are taken by voting, where a simple majority (4 out of 6) is necessary for a decision to be passed.
- RBI Act, 1934 empowers the RBI to take Monetary Policy Decisions
Monetary Policy Committee Members
- Shri Shaktikanta Das,
- Dr Shashanka Bhide,
- Dr Ashima Goyal
- Dr Mridul K. Saggar,
- Dr. Michael Debabrata Patra
- Prof. Jayanth R. Varma
Note: The MPC decided by a majority of 5 to 1 to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
RBI Monetary Policy Key Decisions
- The RBI has retained its growth projection at 9.2 per cent and inflation at 5.3 per cent for the current financial year and 4.5% for FY 2022-23
- RBI sees GDP growth at 7.8% in 2022-23.
- E RUPI digital voucher cap raised from Rs 10,000 to Rs 1 lakh and multiple-use permitted
- VRR and VRRR of 14-day tenor – will operate as the main liquidity management tool
- Variable-rate repo operations of varying tenors will henceforth be conducted as and when warranted.
- NACH mandate limit to be increased to ₹3 crores for trade-related settlementsPSU Bank balance sheets are stronger than the previous year
- Extension of on tap liquidity for emergency health services and contact intensive sectors till June 30, 2022
- RBI will increase the mandate limit from Rs 1 crore to Rs 3 crore for trade credit to MSMEs
- RBI projects retail inflation for 2022-23 at 4.5%, with Q1 2022-23 at 4.9%, Q2 at 5%.
- On-tap liquidity facilities of Rs 50,000 crore and Rs 15,000 crore for emergency health services and contact-intensive sectors, respectively, were announced in May and June 2021.
RBI Monetary Policy Rates
|Policy Repo Rate||4.0%|
|Reverse Repo Rate||3.35%|
|Marginal Standing Facility Rate||4.25%|
RBI Monetary Reserve Ratios
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