Belying expectations of bond market participants on taking the first step towards policy normalization, the RBI MPC surprised market participants and unanimously voted to maintain status quo on all policy rates.
The Monetary Policy Committee (MPC) made the following announcements after today’s meeting:
- Repo Rate to remain unchanged @ 4% (unanimously voted).
- Monetary Policy Stance continue to remain “Accommodative” (5-1)
- Reverse Repo Rate to remain unchanged @ 3.35%
- The RBI projected GDP growth for FY23 at 7.8%
- CPI inflation projection retained at 5.3% for FY 2021-22, and 4.5% for FY 2022-23
- VRR and VRRR of 14 day tenor – will operate as main liquidity management tool
- Variable rate repo operations of varying tenors will henceforth be conducted as and when warranted.
- RBI has hiked the limit for inflows under the Voluntary Retention Scheme to Rs 2.5 lakh crore from Rs 1.5 lakh crore. This will provide additional sources of capital for domestic debt markets, including government securities.
- E RUPI digital voucher cap raised from Rs 10,000 to Rs 1 lakh and multiple-use permitted
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