RBI Governor Shakitanta Das on Saturday said that the transmission of interest rate cuts is improving steadily, and it is expected to improve further going forward.
RBI Governor Shakitanta Das on Saturday said that the transmission of interest rate cuts is improving steadily, and it is expected to improve further going forward. The transmission of rate cuts has improved by 69 bps, Shaktikanta Das also said while addressing the reporters along with Finance Minister Nirmala Sitharaman who addressed the board of the central bank earlier Saturday. The credit growth is expected to pick up in the coming months, Shaktikanta Das added. Speaking on the occasion, Nirmala Sitharaman said that she is monitoring banks on the credit flow to the agriculture sector. In the last bi-monthly policy for FY20, the RBI kept the key repo rate unchanged at 5.15 per cent. The meeting was also the first monetary policy review after Budget 2020-21.
The RBI maintained the status quo on the benchmark interest rate amid signs of hardening inflation and an uncertain global environment. A cut in key interest rates is expected to bring down the home, car and personal loan rates. The six-member Monetary Policy Committee (MPC) also maintained an accommodative stance in policy meet. An accommodative stance will be maintained by the central bank as long as it is required. The economic scenario remains weak and the output gap is still negative, the MPC also said.
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On rising inflation, Shaktikanta Das said that the inflation numbers align with the projection earlier made by the central bank. The retail inflation increased to 7.59 per cent in the month of January, much above the comfort zone of the RBI. Even the wholesale inflation rose to 3.1 per cent in the last month. The RBI also stuck to the 6 per cent growth projection for the economy in FY21.