The Reserve Bank kept the repo rate unchanged at 4 per cent and decided to maintain an “accommodative” stance as the economy is yet to recover from impact of second Covid wave. The RBI Governor made the announcement at the end of the bi-monthly Monetary Policy Committee (MPC) review meeting that started on Wednesday. The reverse repo rate has also been left untouched at 3.35 per cent.
“The need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave especially in the background of rising infections in certain parts of the country,” RBI Governor Shaktikanta Das said in the virtual address.
With today’s decision, the RBI has kept the key benchmark rates unchanged for the seventh time. The central bank last cut its policy rates on May 22, 2020, in an off-policy cycle when the covid-19 pandemic first shook the country.
All 61 economists polled by Reuters late last month had said they see no change in the repo rate which has been steady at 4 per cent since May last year.
The Reserve Bank has slashed its key lending rates i.e. repo rate by 115 basis points since March 2020 to cushion the economy from the aftershock of coronavirus.
Observing that economy is slowly recovery from brief hiatus, the Governor said, some of the high frequency indicators reflect recovery.
Meanwhile, last week, the International Monetary Fund (IMF) lowered India’s growth projection from 12.5 per cent to 9.5 per cent for fiscal 2021-22 – down by three percentage points, following the severe second wave of COVID-19 pandemic in the country.
However, for the next fiscal 2022-23, IMF has revised the economic growth estimate for India from 6.9 per cent to 8.5 per cent – higher by 1.6 percentage points.