Mumbai: The Monetary Policy Committee of the Reserve Bank of India (RBI) on Friday unanimously kept the repo rate unaltered at four per cent, said RBI Governor Shaktikanta Das. Consequently, the reverse repo rate, at which the RBI borrows from lenders, stood at 3.35 per
cent. Announcing the bi-monthly policy the RBI Governor said that the Indian economy was entering into a “decisive phase” in the fight against Covid-19. The RBI projected the country’s GDP to contract 9.5 per cent in the current financial year, which ends in March 2021.
The latest MPC decision came as retail inflation continued to remain at the upper end of RBI’s tolerance range. It has stayed stubbornly above 6 per cent, at 6.69 per cent in August and 6.73 per cent in July.
Today’s status quo followed a similar pause in August policy review. High frequency indicators are signalling easing of contraction, Mr Das said, while suggesting that the ‘deep contraction’ of April-June is behind us. Das said in a statement that the real GDP may contract by 9.5 per cent in FY21. This was the first time that
RBI has provided an economic projection since the February 2020 policy meeting. The data projection by the central bank was crucial, as it laid out RBI’s assessment of the extent of the
current slowdown and the medium-term implication of the current crisis.