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RBI maintains an accommodative stance; keeps repo rate unchanged at 4%

Governor of the Reserve Bank of India Shaktikanta Das
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Governor of the Reserve Bank of India Shaktikanta Das

Highlights

To subdue unabatedly high inflation rate, the Reserve Bank of India (RBI) maintained the key lending rates.

Maintaining an accommodative stance, the RBI Governor Shaktikanta Das today said that the Monetary Policy Committee has unanimously decided to leave the policy repo rate unchanged at 4 per cent. He said the marginal standing facility remains unchanged at 4.25 per cent and reverse repo rate stands unchanged at 3.35 per cent.

Mr. Das said the MPC was of the view that inflation is likely to remain elevated with some relief in the winter months from the prices of perishables and bumper Kharif arrival.

The RBI Governor said the signs of recovery are far from being broad-based and are dependent on sustained policy support. He said a small window is available for pro-active supply management strategy to break the inflation spiral being fuelled by supply chain disruptions.

Mr. Das said further efforts are necessary to mitigate supply-side driven inflation pressures. He added that RBI is strongly committed to preserving the stability of the financial sector and will do whatever is necessary on this front.

Stating that economic contractions have started to ease, he said, portfolio flows into emerging markets have recovered and hard currency bond issuances have strengthened for those with stronger credit ratings.

Mr. Das said throughout the Covid-19 pandemic period RBI acted preemptively to face the challenged head-on posed by the virus and fallout of the pandemic on the Indian economy. He ensured that RBI will use various instruments at the appropriate time while ensuring ample liquidity is available to the system.

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