Reserve Bank of India Governor Shaktikanta Das has kept the repo rate unchanged at 4 per cent, amid a surge in Covid-19 cases and imposition of fresh restrictions to control the rampaging virus. Repo rate is the key interest rates at which the RBI lends money to commercial banks. The RBI Governor also said the bank will continue with an accomodative stance, while ensuring Inflation remains under target range
The reverse repo rate – the rate at which RBI borrows from banks – has also been left untouched at 3.35 per cent. The central bank governor made the announcement at the end of the scheduled review of the Monetary Policy Committee (MPC) that began on Monday.
The central bank had last cut its policy rates on May 22, 2020, in an off-policy cycle, when India was in the caught in the 1st wave of the dreaded Covid-19 pandemic. The Reserve Bank has slashed its key lending rate i.e. repo rate by 115 basis points since March 2020 to cushion the economy from the shock of coronavirus crisis.
Meanwhile, the annual retail inflation rate rose to 5.03 per cent in February, a three-month high due to the rise in fuel prices, and analysts are worried that high commodity prices could push inflation higher in coming months.