RBI keeps key lending, borrowing rates unchanged for 6th time in a row; cuts growth forecast to 9.5 per cent
New Delhi | Jagran Business Desk: Reserve Bank of India Governor Shaktikanta Das on Friday announced that the RBI Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 4 per cent, while the reverse repo rate has also been kept unchanged at 3.5 per cent.
"MPC decided to maintain status quo, that is keeping benchmark repurchase (repo) rate at 4 per cent. Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI", Das said while announcing the bi-monthly monetary policy review on Friday.
The repo rate is the rate at which the RBI lends money to the banks, while the reverse repo rate is the rate at which the RBI borrows money from banks when there is excess liquidity in the market. The banks benefit from it by receiving interest for their holdings with the central bank.
Das said that the MCC also decided to continue with an accommodative stance as long as necessary to revive and sustain growth on a durable basis and to mitigate the impact of COVID on the economy
"The RBI's Monetary Policy Committee (MPC) has decided to continue with accommodative stance until necessary to mitigate the impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25 per cent", Shaktikanta Das said today.
This is the sixth time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained the status quo. RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low.
Das said MPC voted unanimously for keeping the interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target. The central bank lowered its estimate for economic growth to 9.5 per cent for the current fiscal from an earlier projection of 10.5 per cent due to the impact of the second COVID wave.
This is the first MPC meeting after official data showed that the Indian economy contracted 7.3 per cent in the last fiscal, weighed down by nationwide lockdown that pummelled consumption and halted most economic activities.
With regard to inflation, the governor said that retail inflation is likely to be 5.1 per cent during the current fiscal. MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and lower tolerance of 2 per cent.
Posted By: Talibuddin Khan