RBI Bimonthly Monetary Policy

RBI Bimonthly Monetary Policy :- The Reserve Bank of India (RBI) has released its 3rd Bi-Monthly Monetary Policy statement for 2020-21. The Monetary Policy was led by RBI Governor Shaktikanta Das.

About Monetary Policy:

Monetary policy refers to the policy of the central bank i.e. RBI, with regard to the use of monetary instruments under its control. The Reserve Bank of India is vested with the responsibility of conducting monetary policy. This responsibility of the bank is explicitly mandated under the Reserve Bank of India Act, 1934.

In the previous monetary policy review, on August 6, the RBI had kept the repo rate and reverse unchanged at 4% and 3.35% respectively.

Here are the latest updates:

*Manufacturing purchasing managers’ index (PMI)rose to 56.8 for September 2020, highest since January 2012: Shaktikanta Das

*From December, Real Time Gross Settlement (RTGS) to be available round the clock, says Das.

*Real GDP expected to decline by 9.5% with risks tilted towards the downside, announces Das.

*Inflation to decline in next 3 months, to ease closer to target by Q4, 2021: RBI governor

*Repo and reverse repo rate to stay unchanged at 4% and 3.35% respectively, announces RBI governor Das.

The governor said the central bank stands ready to take further measures on liquidity, and announced a range of steps :

• Rs 1 trillion of targeted long-term funds with tenors of as much as 3 years from the central bank to banks for investing only in corporate bonds, aimed at easing cash crunch at firms
• RBI had previously allowed banks to hold more government bonds without marking to market. Today, the central bank said it will extend this until March 31, 2022, with conditions
• RBI will buy bonds issued by state governments as a special case. Usually it contains this tool only to federal debt
• Sovereign bonds advanced, with yield on 10-year bonds fell 7 basis points to 5.95 per cent.