Monetary Policy Review: 3-day meet begins today; announcements on Friday

Monetary Policy Review: The bi-monthly meeting of Monetary Policy Committee (MPC) will begin today. The three-day meeting will conclude on Friday, June 4 followed by the announcements by the Reserve Bank Of India Governor Shaktikanta Das who is chairing the meeting. 

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Many experts have opined that amid apprehensions over inflation and continued uncertainty with regards to the second wave of the COVID-19 pandemic, the Central Bank is likely to retain the benchmark interest rate at the existing levels at its upcoming monetary policy review.

In the last MPC meeting in April it kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent. Consequently, the reverse repo rate also remained unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent. 

The MPC also decided to continue with the accommodative stance as long as necessary to 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.
These decisions were 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 RBI's annual report which has been released recently has already made it clear that 'the conduct of monetary policy in 2021-22 would be guided by evolving macroeconomic conditions, with a bias to remain supportive of growth till it gains traction on a durable basis while ensuring that inflation remains within the target.'

The government has retained the inflation target at four per cent with the lower and the upper tolerance band of two per cent and six per cent, respectively, for the next five years (April 2021-March 2026).
The previous MPC meeting was held from April 5, 2021, to April 7, 2021.