New Delhi/Mumbai: The Reserve Bank of India (RBI) Monetary Policy on Friday announced its decision to keep its interest rates and policy rates unchanged, maintaining its previous accommodative stance.
“RBI keeps interest rates unchanged, continues with accommodative stance to revive and sustain growth on a sustainable basis, ” said Shaktikant Das, RBI Governor, on Friday.
The announcement is in line with market expectations and experts who believe RBI will likely keep the policy rates unchanged and maintain an accommodative stance amid the growing uncertainty over the COVID-19 pandemic.
The fears of firming inflation have also refrained the MPC from tinkering with the interest rates on June 4.
This is the sixth time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained status quo. RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The key lending rate — the repo rate are to continue at 4 per cent and the reverse repo rate or the central bank’s borrowing rate will be at 3.35 per cent.
The apex bank added that the fall in inflation rates have provided MPC with some ‘elbow room’ to maintain its stance. “Recent fall in inflation provides elbow room, policy support from all sides required to regain growth momentum,” said RBI Governor.
“A normal monsoon to provide tailwind for economic revival,” said Das.
The central bank, however, has cut India’s economic growth forecast for the current fiscal to 9.5 per cent from previous 10.5 per cent, RBI governor Shaktikanta Das added.
The RBI has projected retail inflation at 5.1 per cent in 2021-22. The bank is planning to buy Rs 40,000 crore worth of governmnet securities on June 17, out of these Rs 1.20 lakh crore G-Securities will be purchased in second quarter, says RBI Governor.
On a positive note, RBI expects that India’s forex reserves may have exceeded USD 600 billion this fiscal year.
This is the first MPC meeting after official data showed that Indian economy contracted 7.3 per cent in the last fiscal, weighed down by nationwide lockdown that pummelled consumption and halted most economic activities.
(With inputs from PTI)