RBI maintains status quo; keeps repo rate unchanged at 4 pc
Concerned over elevated inflation, Reserve Bank of India on Friday decided to leave benchmark interest rate unchanged at 4 percent but maintained an accommodative stance, implying more rate cuts in the future if the need arises to support the economy hit by the COVID-19 pandemic.
The benchmark repurchase (repo) rate has been left unchanged at 4 percent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's Monetary Policy Committee (MPC).
Consequently, the reverse repo rate will also continue to earn 3.35 percent for banks for their deposits kept with Reserve Bank of India (RBI).
He said MPC voted to keep interest rate unchanged and continued with its accommodative stance to support growth.
The central bank had slashed the repo rate by 115 basis points since late March to support growth.
RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The 26th meeting of the rate-setting MPC with three external members — Ashima Goyal, Jayanth R Varma, and Shashanka Bhide — began on December 2. This is the second meeting of these members who are appointed for a term of four years.
The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the Governor, is made up of external independent members.
MPC has been given the mandate to maintain annual inflation at 4 percent until March 31, 2021, with an upper tolerance of 6 percent and a lower tolerance of 2 percent.
In another development, the Reserve Bank has temporarily barred HDFC Bank from launching new digital banking initiatives and issuing new credit card after taking a serious view of service outages at the country's largest private sector lender over the last two years.
(Disclaimer: Additional background information has been added to this PTI copy for context)