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Below is quote on RBI Monetary Policy outcome by Heena Naik, Research Analyst - Currency, Angel One Ltd

*Key Policy Rates*

- The MPC has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 percent.

- Reverse repo rate and marginal standing facility also remains unchanged at 3.35 percent and 4.25 percent respectively.

- The MPC also decided to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy.

*Global Factors*

- Even as the domestic economy is showing signs of mending, the external environment is turning more uncertain and challenging.

*Inflation* 

- Inflation is likely to come lower drawing comfort from the recent catch-up in kharif sowing and likely record production along with adequate buffer stock of foodgrains combined with favourable base effects.

- On the other hand, domestic pump prices remain at very high levels. Rising metals and energy prices, acute shortage of key industrial components and high logistics costs are adding to input cost pressures. 

- Taking into consideration all these factors, CPI inflation is projected at 5.3% for 2021-22. CPI inflation for Q1:2022-23 is projected at 5.2%.

*Economic Activity*

- Domestic economic activity is gaining traction with the ebbing of the second wave. 

- Rural demand is likely to maintain its buoyancy due robust kharif sowing while acceleration in the pace of vaccination along with the upcoming festival season should bolster urban demand. 

- On the other hand, global semiconductor shortages, elevated commodity prices and input costs, and potential global financial market volatility are key downside risks to domestic growth prospects.

- Taking all these factors into consideration, projection for real GDP growth is retained at 9.5% in 2021-22. Real GDP growth for Q1:2022-23 is projected at 17.2%.

*Liquidity Management*

- RBI has indicated its willingness to make a 'gradual' adjustment to the excess liquidity in the monetary system which currently stands at over ₹ 9 lakh crore. 

- The minutes of the MPC’s meeting will be published on October 22, 2021._* 

*_The next meeting of the MPC is scheduled for December 6 to 8, 2021._*

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