RBI keeps benchmark lending rate unchanged
Highlights
- RBI keeps repo rate unchanged at 4%. Consequently, the reverse repo rate stands at 3.35%
- RBI retains GDP growth target at 9.5% & CPI inflation projection at 5.3% in FY22
- RBI said economy hauled itself out of its deepest contraction & 'we are prepared to deal with Covid'
The Reserve Bank of India (RBI) on Wednesday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance in the backdrop of concerns over the emergence of the new coronavirus variant Omicron. Consequently, the reverse repo rate will continue to earn 3.35 per cent for banks for their deposits kept with RBI.
"The Monetary Policy Committee (MPC) has decided to keep benchmark repurchase (repo) rate at 4 per cent," Governor Shaktikanta Das said while announcing the bi-monthly monetary policy review.
The decision to maintain status quo on the benchmark interest rate comes in the backdrop of global scare due to the new coronavirus variant Omicron. This is the ninth consecutive time since the rate remains unchanged. The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
Das, who heads the six-member MPC, said that the MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target.
RBI retained its growth projection at 9.5 per cent for the current fiscal despite concerns over Omicron.
Das also said the headline inflation would peak in the fourth quarter of the current fiscal. The inflation projection has been retained at 5.3 per cent for the current financial year. Retail inflation rose to 4.48 per cent in October from 4.35 per cent in September, mainly due to higher fuel and edible oil prices.
"Price stability remains a cardinal principle of RBI as it fosters growth, stability," the Governor said.
The MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
