RBI keeps interest rates untouched, continues its accommodative stance
The Reserve Bank of India (RBI) maintained a status quo on key rates, keeping the repo rate unchanged, in its bi-monthly policy review announced on Wednesday.
"Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate at 4 percent and the stance remains accommodative. Marginal Standing Facility (MSF) rate and bank rate remain unchanged at 4.25 percent. Reverse repo rate also remains unchanged at 3.35 percent," Reserve Bank of India Governor Shaktikanta Das informed on Wednesday.
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In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times. The repo rate, at which the RBI lends short-term funds to banks, was kept unchanged at 4 percent.
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The reverse repo rate, at which the RBI borrows from banks, was kept unchanged at 3.35 percent. The Marginal Standing Facility (MSF) rate was also kept unchanged at 4.25 percent.
The last time the RBI changed the policy rate was in May 2020. The central bank had slashed the key policy rates in May 2020 to historic lows to support the economy hit by the Covid-19 pandemic.
Since then the RBI has maintained the status quo. However, during this period the Indian economy has been on a roller coaster. During April-June 2020 quarter, a period when the RBI last changed policy rates, India's GDP slumped by 24.4 percent.
The economy posted a growth of 20.1 percent during April-June 2021 quarter. The GDP posted a growth of 8.4 percent in July-September 2021 quarter as against a contraction of 7.4 percent in the year-ago period.
There has been a wide fluctuation in inflation also. However, the RBI has maintained a 'wait and watch" approach as these fluctuations have been guided by factors largely beyond its control.
-PTC News
