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Eleventh time in a row: RBI keeps repo rate unchanged at 4%

NEW DELHI: The Reserve Bank of India (RBI) on Friday kept key interest rates unchanged for the eleventh straight time in a row, and retained accommodative stance.
The monetary policy committee held the lending rate, or the repo rate, at 4%. The reverse repo rate, or the key borrowing rate, was also kept unchanged at 3.35%.
RBI’s monetary policy committee (MPC) met for the first time in the current financial year.
The six-member MPC, headed by RBI governor Shaktikanta Das, met for three days from April 6.
The repo rate is the rate at which the central bank lends to commercial banks. While, reverse repo rate is the rate at which the RBI borrows money from the banks in the short term to suck out the excess liquidity in the system.
The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
It also raised its inflation forecast to 5.7% for the current fiscal year compared with 4.5% in the last fiscal year.
The ongoing war between Russia and Ukraine has further casted an upward pressure on inflation in India, with prices of major commodities rising.
Since its previous meeting in February, Brent crude price has gone up 21 per cent, domestic petrol, diesel pump prices are up 6.5 per cent, domestic LPG cylinder price is up 6 per cent, and commercial LPG is up 12.5 per cent, and edible oils are up around 12 per cent.
It lowered growth projection to 7.2% from 7.8% earlier.
Shaktikanta Das said it will engage in a gradual withdrawal of liquidity over a multi-year timeframe beginning this year. Das said economic activity is barely above pre-pandemic levels but continues to steadily recover.
(With inputs from agencies)

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