What were the highlights of the RBI policy announcement on 07 April?

It was a status quo policy announcement with the RBI holding repo rates at 4% and also maintaining its accommodative stance. However, there are subtle warnings by the RBI about potential inflation risks. However, the full-year inflation estimate for the fiscal year FY22 has been cut from 5.2% to 5.0%, even while flagging inflation risks from supply side.

The GDP contraction for FY21 was pegged at -8% and the GDP growth for FY22 has been maintained at 10.5%. This is lower than the IMF estimate of 12%. RBI took an important decision to have open market operations calendar to give periodic support to the secondary bond markets. Benchmark bond yields fell to 6.07% and rupee weakened to 74.5/$.