InvestorQ : what were the key highlights of the RBI monetary policy announced on 06 August?
Dhwani Mehta made post

what were the key highlights of the RBI monetary policy announced on 06 August?

Answer
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Khushi Patel answered.
1 month ago


The Monetary Policy Committee or MPC announced the monetary policy on August 06 and the major highlights are as under:

a) The repo rate was retained at 4% and the reverse repo rate at 3.35%. As a result, even the bank rate remained static at 4.25%.

b) The MPC retained its accommodative stance for the monetary policy leaving the door open for further rate cuts if warranted.

c) The MPC completed four years of existence and this marks the 24th policy presented by the MPC over that period.

d) The six members of the MPC were unanimous about holding status quo on rates considering 115 bps rate cuts in last 4 months and higher inflation.

e) Growth is expected to remain in negative territory in the first half of FY21 and is likely to contract for the full year FY21 on lag effect.

f) The RBI has expressed confidence that agriculture will drive the bounce in the second half driven by better monsoons and better rural demand.

g) Inflation at 6.09% remains above the RBI upper limit of 6% and that has also impelled the RBI to go slow on rate cuts.

h) Repo rates at 4% are at historic lows and hence RBI will take call on further rate cuts in October 2020 after the Kharif output figures are out.

i) RBI also announced the enhancement of the special liquidity facility by Rs.10,000 crore to be divided equally between housing and agriculture.

j) The gold LTV ratio has been increased from the current 75% to 90% till Mar-21. This will enable households to better monetize gold value.

More details on the discussion will be available when the minutes of the MPC meeting are announced on 20 August.