The central bank had slashed the repo rate by 115 basis points (bps) since late March this year.
The gross domestic product (GDP) will contract by 9.5 per cent in financial year 2020-21, which ends in March 2021, RBI Governor Shaktikanta Das said on Friday, while maintaining the status quo on interest rates. Speaking to the media, at the 3-day meet of the newly constituted Monetary Policy Committee (MPC) meeting, the Governor also said contraction in economic growth witnessed in the April-June quarter of the fiscal is behind us, silver lining is visible and mood of the nation has shifted from despair to confidence and hope.
The Reserve Bank of India (RBI) left key interest rates unchanged as widely expected, as it expects inflation to remain at elevated levels in September, and ease only in the third and fourth quarters of current financial year. The monetary policy committee kept the repo rate, its key lending rate, unchanged at 4 per cent while the reverse repo rate or the key borrowing rate remained at 3.35 per cent. At the same time, the central bank retained an accomodative monetary policy stance to support the coronavirus-hit economy.
In its August meet, the MPC left the repo rate unchanged at 4 per cent and reverse repo rate at 3.35 per cent. The central bank has slashed the repo rate by 115 basis points (bps) since late March this year and by a total of 250 basis points since February 2019.
The MPC meeting was originally due to conclude on October 1, but had to be rescheduled as the government had delayed in appointing three new external members to the panel. The meeting of the rate-setting MPC with three new external members -- Ashima Goyal, Jayanth R Varma and Shashanka Bhide began on October 7 and the new external members voted in today's decision.
The status quo on key interest rates was widely expected by economists, as the RBI remains committed to curb elevated levels of inflation and revive the economy which contracted a record 23.9 per cent in April-June period.
