The Reserve Bank of India (RBI) on Thursday retained its key short-term lending rates, but maintained its growth oriented accomodative stance.
Accordingly, the Monetary Policy Committee of the central bank maintained the repo rate or short-term lending rate for commercial banks, at 4 per cent. Likewise, the reverse repo rate stands unchanged at 3.35 per cent.
The MPC voted to maintain accommodative stance, thus opening up possibilities for more future rate cuts. Similarly, the marginal standing facility (MSF) rate and the ‘Bank Rate’ remain unchanged at 4.25 per cent.
“The MPC sifted through domestic and global conditions and evaluated their unfolding impact on overall outlook for India and the world,” RBI Governor Shaktikanta Das said.
“At the end of its deliberations, the MPC voted unanimously to leave the policy repo rate unchanged at 4 per cent and continue with the accommodative stance of monetary policy as long as necessary to revive growth, mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward.”
It was expected that the Reserve Bank’s MPC might hold rates as recent data showed that retail inflation has been at an elevated level during June.
The retail or consumer price index stood at 6.09 per cent in June. The urban CPI stood at 5.91 per cent and rural at 6.20 per cent. As per the data, retail inflation level has reached the upper limit of the medium-term CPI inflation target of 4 per cent. The target is set within a band of +/- 2 per cent.