India’s Monetary Policy Committee keeps policy rate constant at 4.0% pa in December 2021

The monetary policy committee (MPC) kept the policy rate or the repo rate unchanged at 4.0% pa. The repo rate was lowered from 4.4% pa to 4.0% pa on May 22, 2020, after the first nationwide lockdown, and it has been kept unchanged since then. Also, to mitigate the impact of COVID-19, the MPC decided to maintain an accommodative stance for as long as necessary, while ensuring that inflation remains within the target range. Despite some anticipation of monetary tightening in India and a spike in reverse repo rate, it was kept unchanged at 3.35% pa.

The repo rate was lowered from 4.4% pa to 4.0% pa on May 22, 2020

GDP growth moderated to 8.4% y/y in Q3 2021 thanks to dissipating low base, and headline inflation has remained below 6% since July 2021, which has provided the MPC with room to keep the policy rate and policy stance unchanged.

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