The Reserve Bank has not made any changes in interest rates in the October monetary policy review meeting. However, after the meeting, the RBI governor expected inflation to decrease further in the next three months. He said that the rural economy will gain momentum due to increasing agricultural activities in the country. Also, GDP growth rate is expected to be faster in the fourth quarter of the financial year.

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Reserve Bank Governor Shaktikanta Das said that the correction is continuing after the fall of April-June this year due to Corona virus. The focus is now on revival more than stopping the corona. However, he has predicted the real GDP growth to be negative for the entire financial year 2021. According to the RBI governor, GDP growth is expected to be minus 9.5 percent in this fiscal year 2020-21.

Inflation will come down

The RBI governor also said that retail inflation is expected to be close to the target set till the last quarter of the current financial year. However, by the end of the September quarter, retail inflation is expected to be 6.8 percent above the fixed six percent upper limit. But after this it will start to decrease. Inflation is expected to go up to 5.4 percent in the third quarter of the fiscal and 4.5 percent in the fourth quarter.

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The Reserve Bank has reduced the risk weightage on new housing loans. This has been reduced to 31 March 2022. Shaktikanta Das, referring to the harvest figures after the good monsoon, said that this would further strengthen the rural economy. He also told that due to good crop, the auto sector will also see growth which will gradually strengthen the country’s economy.

 

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