RBI Maintains Status Quo On Repo & Reverse Repo Rates
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The Reserve Bank of India (RBI) governor Shaktikanta Das in his first press conference post the Union Budget 2021 said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at the existing 4 per cent to spur the growth of the country in the backdrop of the ongoing pandemic.
The RBI governor announced that the decision was taken unanimously and said that the reverse repo rate too was kept unchanged at 3.35 per cent. This was the fourth time in a row that RBI left interest rates unchanged.
“It (MPC) also unanimously decided to continue with the accommodative stance of monetary policy as long as necessary—at least through the current financial year and into the next year— to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward,” he added.
The governor said the GDP growth was projected at 10.5 per cent for the next fiscal.
He also took a note that for the first time during the COVID-19 period, inflation has eased below the upper tolerance level of 6 per cent.
Commenting on the budget, he said, “The Union Budget 2021-22 has provided a strong impetus for revival of sectors such as health and well-being, infrastructure, innovation and research, among others. This will have a cascading multiplier effect going forward, particularly in improving the investment climate and reinvigorating domestic demand, income and employment.”
The banker’s bank had slashed the repo rate by 115 point basis in late March 2020 to 4 per cent, a 19-year low, to cushion the country’s economy which was showing early signs of going south. India was one of the worst hit countries by the pandemic with its economic growth contracting to 23.9 per cent, lowest in 24 years, in the first quarter of 2020-21 (April - June).