Highlights
- RBI proposes status quo on the older repo rate
- Government has to keep inflation under control
- The repo rate is fixed at 4% in the RBI monetary policy, 2021.
The six-member RBI monetary policy 2021 that is led forward by Governor Shaktikanta Das has recently revealed the outcome of the monetary policy. The Reserve Bank of India has a bi-monthly monetary policy which is often altered to be regularly updated. RBI has announced that it will maintain the status quo on the benchmark repo rate.
The benchmark repo rate is when short-term funds are loaned to banks by the central bank. The rate is usually four percent. In the given condition of coronavirus pandemic and a gratin rise in the virus’s spread, the repo rate is kept constant. Accommodative monetary stands are not changed to allow the fragile economic state to recover.
Present Economic State Nurtured
The present state of the economy has been greatly affected by the spread of the disease worldwide. The renewed spread of the disease has turned out to be very concerning for the people seeking to change their business model after the pandemic condition. Indian economy is suffering from a lack of jobs and monetary support in each sector.
There has been a steep rise in petrol and Diesel’s values, which has led to this cause. RBI has presented the records that if the steps are not taken immediately, the country is likely to suffer from a major financial breakdown in the next few months.
RBI Monetary Policies For 2021
RBI has stated that the repo rate that has been opted for this particular year will remain the same as before. This can help the bank to recover the losses that they have faced during the lockdown. The Policy has announced that the first value for the fiscal will be coming days after the Government will maintain the target set of RBI for inflation. The government must maintain the target of inflation between the rate of 2 to 6 percent for the next few years.
The repo rate that has been mentioned for the shirt lending period is 4% and the reverse repo rate for the same event is fixed to be 3.35%.
Hope For A Better Future
It is expected that India will be able to rise from the given state of affairs once the pandemic blows over. Till then, there will be inflation in several basic commodities as it is observed even not. The ability of a country to keep the inflation in control will be tested during the next few months with this low repo rate in the RBI monetary policy, 2021
