Mumbai (Maharashtra) [India]: The Reserve Bank of India (RBI) on Friday kept repo rate unchanged for seventh time straight and continued with an accommodative stance, citing the need to support ongoing growth recovery amid continued uncertainty and global financial market volatility.
The announcement came after a three-day meeting of its Monetary Policy Committee (MPC). The central bank has cut policy rates by 115 basis points since February 2020.
The repo rate — the central bank’s lending rate — remains unchanged at 4 per cent and reverse repo rate — borrowing rate — at 3.35 per cent.
The second Covid wave has raised uncertainty around economic outlook and pushed potential policy normalisation further into the future.
While the economy is slowly coming back on track, economists say the RBI does not want to derail the pace of growth by tweaking the rates or stance.
Economic growth has to be sustainable before the rates are raised at a time when inflation is visibly sticky. The price build-up in global commodities, especially for those whose prices are a pass through into domestic market, has put significant pressure on both retail and wholesale inflation since January.