RBI decides to keep repo rate at 4%

|NDTV|

The Reserve Bank has kept the repo rate unchanged at 4 per cent, Governor Shaktikanta Das said while maintaining that the policy stance continues to be “accommodative”. The RBI Governor made the announcement at a press briefing 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.

With today's decision, the RBI has maintained the key benchmark rates unchanged in six consecutive monetary policy meetings. 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.

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.

The status-quo on the policy rates comes in the backdrop of a slowdown in manufacturing and services sectors, which contribute more than two-thirds of India's gross domestic product. The seasonally adjusted India Services Business Activity Index posted 45.4 in July, a third successive month in contraction territory and industrial production expanded at a slower pace, growing 29.3 per cent in May from a year earlier, compared with almost 135 per cent in April.

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.

(Except for the headline and the pictorial description, this story has not been edited by THE DEN staff and is published from a syndicated feed.)