Reserve Bank of India (RBI) Governor Shaktikanta Das on December 8 announced that the variable rate reverse repo (VRRR) auction amount will be progressively enhanced to Rs 7.5 lakh crore by December 31.
The central bank would continue to rebalance liquidity conditions in a non-disruptive manner, Das said, as he shared the outcome of the monetary policy committee (MPC) meeting.
The MPC left key rates unchanged for the ninth consecutive time while maintaining an “accommodative” stance. The repo rate, the key lending rate, stays at 4 percent, the reverse repo rate at 3.35 percent.
Also read | RBI Monetary Policy: MPC keeps repo rate unchanged; stance accommodative
"It is now proposed to enhance the 14-day VRRR auction amounts on a fortnightly basis in the following manner: Rs 6.5 lakh crore on December 17; and further to Rs 7.5 lakh crore on December 31. Consequently, from
January 2022 onwards, liquidity absorption will be undertaken mainly through the auction route,” Das said.
The central bank has been rebalancing liquidity by shifting from overnight repo to the 14-day variable reverse repo, he added. It aims to re-establish the 14-day VRRR auction as the main liquidity management operation.
RBI Monetary Policy LIVE Updates
Also read: RBI Monetary Policy: Real GDP growth forecast retained at 9.5 percent
The central bank retained its growth projection at 9.5 percent for the current fiscal despite concerns over the new Omicron variant of the coronavirus.
Das also said the headline inflation would peak in the fourth quarter of the current fiscal. The inflation projection has been retained at 5.3 percent for the current financial year.
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