MPC Leaves Repo Rate Unchanged At 4%

New Delhi: The Reserve Bank of India’s six-member monetary policy committee (MPC) left the key rates unchanged in its bi-monthly policy review on Friday.

While announcing its bi-monthly monetary policy changes after a three-day meeting, governor Shaktikanta Das said.. that the MPC voted unanimously to maintain the status quo and keep the repo rate unchanged.

The RBI left the interest rates unchanged despite rising inflationary pressures and the depreciation of the rupee.

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Retail inflation in August marginally eased to a fourth-month low of 5.3 per cent, within the RBI’s comfort zone, while WPI-based inflation surged to 11.39 per cent in August due to costlier manufactured goods.

In view of the accommodative monetary stance, the central bank looks to support a fragile economic recovery. Policy repo rate or the short-term lending rate is currently at 4 per cent, and reverse repo rate 3.35 per cent. The benchmark repo rate is the rate at which the central bank lends short-term funds to banks.

Since the outbreak of pandemic in March 2020, RBI has cut repo rates to a record low of 4 per cent through two rate cuts of 75 bps in March 2020 and 40 bps in May 2020. Since then, the RBI didn’t cut the interest rates further.

The central bank maintained the satnce in the back of gradual recovery in domestic economic conditions and increased pace of vaccination that boosted consumer sentiments and confidence.

Rating agency Moody’s had raised the sovereign credit rating outlook to stable from negative, citing improvement in the financial sector and faster than expected economic recovery.