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Omicron affects the Repo Rate

Amid the rising fear of Omicron variant of Covid-19 across the globe, RBI is likely to keep the key lending rates unchanged in December 6-8 MPC meeting.

The Reserve Bank’s rate-setting panel began its three-day deliberations on.

Monday to decide the next monetary policy.

The monetary policy is a policy formulated by the central bank, i.e., RBI (Reserve Bank of India) and relates to the monetary matters of the country. The policy involves measures taken to regulate the supply of money, availability, and cost of credit in the economy.

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) unanimously kept key lending rate repo rate unchanged on December 8. Amid the rising fear of Omicron variant of Covid-19 across the globe, India’s central bank kept the key lending rates unchanged for the ninth consecutive time.

Repo is the rate at which the Reserve Bank of India lends short-term funds to banks.

It has retained the key lending rate, repo, at 4 percent, and maintained its stance as “accommodative”.

So far, India has reported over two dozen Omicron cases. This has forced several states to impose fresh travel restrictions. There is a fear that the Omicron surge will lead to a third wave of Covid-19 in the country.

The economists feel that given the uncertainties of the new Omicron variant on the economy, the RBI should adopt a wait-and-watch approach despite inflationary pressures.

On the other hand, the reverse repo rate is mostly expected to remain unchanged at 3.35 per cent, but several economists expect a small increase as the central bank tries to normalize the gap between the lending and borrowing rate to pre COVID-19 levels. Social media has started using hashtags saying repo rate unchanged and news channels have posted about the information on their twitter accounts.

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