NEW DELHI: The Reserve Bank of India (RBI) on Friday decided to keep key lending rates unchanged in its February policy review meeting. While, it projected a gross domestic product (GDP) growth rate of 10.5 per cent for the financial year 2021-22, on the back of recovery in economic activities.
The six-member monetary policy committee (MPC), headed by governor Shaktikanta Das, kept repo rate unchanged at 4 per cent, while maintaining accommodative stance.
Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks.
Repo rate is the rate at which the RBI lends to banks, while reverse repo rate is the rate at which it borrows from banks.
This is the first MPC meeting after the presentation of the Union Budget 2021-22.
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With regard to inflation, the RBI governor said vegetable prices are expected to remain soft in the near term as the central bank projected retail inflation rate to come down to 5.2 per cent in the current quarter and progressively decline to 4.3 per cent by the third quarter of the next fiscal.
RBI mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
The MPC has been mandated by the government to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side.
CPI inflation had eased sharply in December primarily on account of a substantial correction in food inflation -- by 5 percentage points -- to 3.9 per cent in December from 8.9 per cent in November.
Shaktikanta Das added that the growth outlook has improved significantly and the vaccination drive will help the economic rebound.
The RBI governor further said that the government will be reviewing the inflation target by March end.
In addition, Das said that RBI will allow retail investors to directly access G-sec market. With this India joins select countries allowing such arrangements.
The Reserve Bank will also rollout Integrated Ombudsman Scheme for customer grievance redressal by June 2021.
The MPC has kept the key benchmark rate unchanged since the last three reviews. It had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The central bank has cut policy rates by 115 basis points since February last year.
(With inputs from agencies)