RBI keeps key policy rate unchanged, repo rate 4%

The Reserve Bank of India (RBI) kept its key policy rates unchanged on Friday, The repo rate has been kept at 4%. The reverse repo rate or the central bank’s borrowing has been unchanged at 3.35%.

The RBI is likely to keep the policy rates unchanged and maintain an accommodative stance to revive and sustain growth on a sustainable basis amid going uncertainty of second wave of the coronavirus pandemic.

“The MPC was of the view that at this juncture, policy support from all sides is required to regain the momentum of growth that was evident in H2:2020-21 and to nurture the recovery after it has taken root,” said RBI Governor Shaktikanta Das while announcing the decisions.

The fears of firming inflation also refrained the RBI MPC from tampering with the interest rates on June 4.”MCC also decided to remain with the accommodative stance as long as necessary to revive and sustain growth on durable basis and to mitigate impact of Covid on economy,” RBI governor Shaktikanta Das said in Mumbai after MPC’s three-day meeting.

”By way of an incentive, banks will be permitted to park their surplus liquidity up to the size of the loan book created under this scheme with the Reserve Bank under the reverse repo window at a rate which is 25 bps lower than the repo rate or, termed in a different way, 40 bps higher than the reverse repo rate,” Das said.

This is the sixth time in a row that RBI has kept the benchmark rates unchanged, in clear response to the emergencies of the COVID-19 pandemic uncertainties.