RBI's 3-day MPC meet begins today; policy announcements on Friday

RBI MPC Meeting October 2021: The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) meeting is scheduled to start from today, October 6, 2021, and will continue till October 8, 2021. The last meeting was held from August 4, 2021, to August 6, 2021.

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The Monetary Policy refers to the policy of the central bank with regards to the use of monetary instruments under its control to achieve the goals specified in the Act. As per the official website of RBI, rbi.org.in, the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth.

The major highlights in the last MPC meeting held from August 4, 2021 to August 6, 2021 are as follows:

1) The MPC at its meeting decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent

2) Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 4.25 per cent

3) The MPC also decided 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

It has to be noted that the above-mentioned 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.

In the last meeting, all members of the MPC – Shashanka Bhide, Ashima Goyal, Jayanth R. Varma, Mridul K. Saggar, Michael Debabrata Patra and Shaktikanta Das – unanimously voted to keep the policy repo rate unchanged at 4 per cent.

Also, all members, namely, Shashanka Bhide, Ashima Goyal, Mridul K. Saggar, Michael Debabrata Patra and Shri Shaktikanta Das, except Prof. Jayanth R. Varma, voted 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. Prof. Jayanth R. Varma expressed reservations on this part of the resolution.