BBN Bureau
RBI projects GDP growth at 7.2 pc for 2022-2023
MUMBAI/April 08-2022: Without springing much surprise, the Reserve Bank of India (RBI) on Friday said it retained both the key policy rates, repo rate and reverse repo rate at 4 per cent and 3.35 per cent respectively, for the 11th round in a row.
While repo rate is the overnight rate at which RBI lends money to banks, the reverse repo rate is at which it borrows surplus funds from the commercial banks.
Friday’s (Apr 08) was the RBI’s first bi-monthly policy meeting for the current financial year 2022-23.
RBI also said it would restore the width of the liquidity adjustment facility (LAF) to 50 basis points (bps).
Shaktikanta Das, the RBI Governor, said whatever benefits are expected from the receding of Omicron wave, are feared to be offset by an escalation in geopolitical tensions, especially the current Russia-Ukraine tensions.
“Economy is confronted by new and humongous challenges. The situation in Europe (Russian-Ukraine conflict) can derail the global economy,” the RBI Governor said.
Das said the real GDP growth is projected at 7.2 per cent for 2022-2023 from a previous projection of 7.8 per cent; while retail inflation is predicted at 5.7 per cent for FY23 from 4.5 per cent earlier.
RBI has held the key repo rate at record lows since May 2020 and reiterated time and again that it will remain supportive of economic growth. The central bank primarily uses these tools to control inflation. The government has mandated RBI to keep inflation in the range of 2-6 per cent.
Retail inflation in February surged to 6.07 per cent, breaching the upper limit of RBI’s target range. RBI mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
