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The Reserve Bank pointed out that in the context of continued uncertainty and global financial market volatility, it is necessary to support continued growth and recovery.
The Reserve Bank of India (RBI) kept the repo rate unchanged for the seventh consecutive time on Friday, and continued to maintain an easing stance, citing the need to support continued growth and recovery in the context of continued uncertainty and global financial market volatility.
The announcement came after its Monetary Policy Committee (MPC) held a three-day meeting. Since February 2020, the central bank has lowered its policy interest rate by 115 basis points.
The repo rate-the central bank’s lending rate-remains unchanged at 4%, and the reverse repo rate-the borrowing rate-remains at 3.35%.
The second wave of Covid increased the uncertainty of the economic outlook and pushed potential policy normalization into the future.
Although the economy is slowly getting back on track, economists say that the Reserve Bank of India does not want to disrupt the growth rate by adjusting interest rates or stance.
Economic growth must be sustainable before interest rates can be raised when inflation is clearly sticky. Since January, global commodity prices have risen, especially those whose prices will be passed on to the domestic market, putting tremendous pressure on retail and wholesale inflation.
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