RBI keeps interest rates unchanged amid COVID-19 resurgence

By Press Trust of India|7th Apr 2021
India's central bank has kept the benchmark repurchase rate unchanged at 4 percent and maintained an accommodative policy stance to support growth.
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The Reserve Bank of India on Wednesday expectedly left interest rates unchanged and maintained an accommodative stance as the economy faces a renewed threat to growth due to the resurgence of coronavirus cases.

The central bank kept the benchmark repurchase rate unchanged at 4 percent and maintained accommodative policy stance to support growth.

RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) kept its estimate for economic growth unchanged at 10.5 percent for the current fiscal.


MPC saw inflation edging up to 5.2 percent in the first half of the new fiscal from 5 percent in the January-March period and moderate to 4.4 percent in Q3 of FY22.


RBI said that it expects retail inflation at 5.2 percent in the first half of the current fiscal and revised downwards the target to 5 percent for the quarter ended March.


While headline inflation at 5 percent in February 2021 remains within the tolerance band, some underlying constituents are testing the upper tolerance level.


Going forward, the food inflation trajectory will critically depend on the temporal and special progress of southwest monsoon in the 2021 season, RBI Governor Shaktikanta Das said on Wednesday while announcing the first monetary policy for the current fiscal.

Reserve Bank of India (RBI) has kept the key repo rate unchanged at 4 percent to support growth in the current situation.


Das said there has been some respite from the incidence of domestic taxes on petroleum products through coordinated actions by the Centre and states could provide relief on top of the recent easing of the international crude prices.


However, the combination of international commodity prices and logistics cost may push up input price pressures across manufacturing and services, he added.


"Taking into consideration all these factors, the projection for CPI inflation has been revised to 5 percent in Q4 of FY2021; 5.2 percent in Q1 FY2021-22; 5.2 percent also in Q2 of FY22; 4.4 pc in Q3 and 5.1 percent in Q4 with risks broadly balanced," Das said.


Earlier, the central bank had projected retail inflation at 5.2 percent for the 2021 March quarter.


RBI has the mandate to keep inflation at 4 percent with a bias of plus or minus 2 percent.


Edited by Teja Lele

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