The central bank also maintained an “accommodative” policy stance, ruling out any increase for now.
The Reserve Bank of India revised the real GDP growth projection for 2020-21 from -9.5% to -7.5%, Governor Shaktikanta Das said in an online briefing at the end of the meeting of the Monetary Policy Committee. The central bank had estimated that GDP would shrink 9.5 percent in its October assessment. The RBI governor also expressed confidence that the economy will witness positive GDP growth in the second half of fiscal year 21. The revised projection comes in the context of the RBI’s decision to maintain an “accommodative” policy stance. in its fifth bimonthly monetary policy for fiscal year 21.
The Monetary Policy Committee of the Reserve Bank of India kept the key interest rate unchanged at 4 percent, keeping rates at existing levels for the third consecutive review. Since May, the buyback rate, or the key interest rate at which the RBI lends money to commercial banks, has been stable at a 19-year low of 4%. The reverse repurchase rate, the rate at which the RBI borrows from banks, will remain at 3.35%.
Most economists expected the monetary policy status quo, amid high levels of inflation and a contraction in gross domestic product (GDP).
Retail inflation in the country rose to its highest level in October in more than six years due to higher food prices. According to data from the Consumer Price Index (CPI) published by the Ministry of Statistics and Program Implementation, inflation stood at 7.61% in October, the highest level since May 2014.
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