RBI keeps repo rate unchanged at 4%; Continues with accommodative stance
New Delhi, June 04: The Reserve Bank of India (RBI) on Friday kept its key policy rates unchanged at 4 per cent. This is the sixth consecutive time when the monetary policy committee has retained key rates. The central bank lowered its estimate for economic growth to 9.5 per cent for the current fiscal from earlier projection of 10.5 per cent due to the impact of the second COVID wave.
RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
"Tough times call for tough decisions. I am convinced as we stretch out to bring the virus under control it will bring the best out of us," Governor Shaktikanta Das said in Mumbai after a three-day meeting of the regulator's Monetary Policy Committee (MPC).
With this repo rate continues to be at 4 percent, while reverse repo rate (the rate at which RBI borrows from banks) will be at 3.35%.
"Monetary Policy Committee (MCC) voted to maintain status quo i.e. repo rate remains unchanged at 4%. MCC also decided to continue with accommodative stance as long as necessary to revive and sustain growth on durable basis and to mitigate impact of COVID on economy," Das said.
"Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25%. The reverse repo rate also remains unchanged at 3.35%," he added.
This is the first MPC meeting after official data showed that 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 a lower tolerance of 2 per cent.