RBI keeps policy repo rate unchanged at 4%. Signs of economic recovery far from broad-based, said RBI Governor Shaktikanta Das. This is the third time that the RBI has maintained status quo.
Das also said that the central bank will continue the accomodative stance as long as needed, implying more rate cuts in the future if need arises to support the economy hit by the Covid-19 pandemic.
The Marginal Standing Facility (MSF) rate and the bank rate remain unchanged at 4.25%. The reverse repo rate remains unchanged at 3.35%.
Inflation spiral being fuelled by supply chain disruptions, excessive margins and indirect taxes, the RBI governor said
"Monetary Policy Committee (MPC) was of the view that inflation is likely to remain elevated with some relief in the winter months from prices of perishables and bumper Kharif arrivals," Das said.
Real GDP growth projected at -7.5%, the RBI projected inflation at 6.8% for Q3 of this fiscal.
He said MPC voted for keeping interest rate unchanged and continued with its accommodative stance to support growth.
The central bank had slashed the repo rate by 115 basis points since late March to support growth.
RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The 26th meeting of the rate-setting MPC with three external members -- Ashima Goyal, Jayanth R Varma and Shashanka Bhide -- began on December 2. This is the second meeting of these members who are appointed for a term of four years.
The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the Governor, is made up of external independent members.
MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
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