The monetary policy committee voted unanimously to stand pat on the repo rate and voted by 5-1 majority to continue with the accommodative monetary policy stance as the outlook for inflation and growth and the uncertainties relating to Omicron spillover warrant continued policy support for durable and broad based recovery.
The RBI, on its part, also kept the reverse repo rate unchanged despite short-term rates rising. The market was expecting the reverse rate to be hiked by 20-25 basis points so that the policy corridor between the repo rate and reverse repo rate is narrowed.
The repo rate is currently at 4 per cent. The reverse repo rate is at 3.35 per cent.
Accommodative stance to continue
RBI Governor Shaktikanta Das underscored the loss of momentum in economic activity. “Our actions will be calibrated and well-telegraphed,” he said.
Repo rate is the interest rate Banks pay to RBI for drawing funds from it to overcome short-term liquidity mismatches.
Reverse repo rate is the interest rate Banks earn for parking surplus short-term funds with RBI.