RBI keeps repo rates unchanged amid rising inflation

The Reserve Bank of India (RBI) on Thursday kept the interest rates unchanged amid a recent rise in retail consumer prices and said it would ensure inflation remains within target going forward.

Currently, the repo rate stands at 4.0% and the reverse repo rate at 3.35%.

During the press briefing, RBI Governor Shaktikanta Das said that the accommodative stance of the monetary policy will continue as long as necessary.

"Accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of COVID19 pandemic while ensuring that inflation remains within target going forward," he told the mediapersons.

"RBI is perhaps the only central bank in the world which has set up a special quarantine facility for continuity of critical operations," he added.

The RBI Governor also said that the Monetary Policy Committee (MPC) noted that in India too, economic activity had started to recover, but surges of fresh infections have forced fresh lockdowns, hence several high-frequency indicators have levelled off.

"Taking into consideration all factors, the GDP growth in the first half of the year is estimated to remain in the contraction zone. For the year 2020-21 as a whole, real GDP growth is also estimated to be negative," he added. 

The Reserve Bank of India has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50%.