RBI maintains status quo on interest rates

Mumbai: The Reserve Bank of India (RBI) on Friday held key interest rates and maintained an accommodative stance amid uncertainty over the economic impact of the COVID-19 pandemic’s second wave.

The announcement came after a three-day meeting of its Monetary Policy Committee (MPC).

The RBI has kept repo rate the central bank’s lending rate unchanged at 4 per cent and reverse repo rate borrowing rate at 3.35 per cent.

 

The second Covid wave has raised



uncertainty around economic outlook and pushed potential policy normalisation further into the future.

The central bank has cut policy rates by 115 basis points since February 2020.

While the economy is slowly coming back on track, economists say the RBI does not want to derail the pace of growth by tweaking the rates or stance.

Economic growth has to be sustainable before the rates are raised at a time when inflation is rising.