The Reserve Bank of India (RBI) on Friday kept the repo rate unchanged for the seventh time in a row citing the need to support the ongoing growth recovery amid continued uncertainty and global financial market volatility.
“RBI keeps interest rates unchanged at 4 per cent and will continue with the accommodative stance as long as necessary,” governor Shaktikanta Das said.
The central bank’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 4 per cent while the reverse repo rate has been maintained at 3.35 per cent.
Also read: Coronavirus update: India records 44,643 new cases and 464 deaths
RBI Governor Shaktikanta Das said the MPC will maintain status quo till the economy recovers from the impact of the second wave of the Covid-19 pandemic. But Das clarified that the country is in a much better position and many economic indicators have improved.
“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 a virtual address accompanying the MPC’s decision.
“Economy recovering from setback of 2nd wave of Covid-19 and economic activity to pick up on vaccination,” he added.
Also read: Windows 11: All you need to know about
The statement follows the three-day review meeting of the six-member MPC which had begun on Wednesday. Majority of economists had expected RBI’s MPC to keep the key lending rate unchanged.
The repo rate is the rate at which the central bank lends to its clients generally against government securities. The reverse repo rate, on the other hand, allows banks to deposit funds with the central bank and earn interest on it.
The RBI has cut the repo rate by a total of 115 basis points since March 2020 to support the economy during the coronavirus crisis. In 2019, the central bank had slashed rates by 135 basis points.
