A man checks his phone outside the headquarters of the Reserve Bank of India (RBI) in Mumbai. (REUTERS / Francis Mascarenhas / Archives)
The monetary policy committee (MPC) kept the repurchase rate, its key interest rate, at 4%, while the reverse repurchase rate or the key interest rate remained at 3.35%.
- News18.com Mumbai
- Last update: October 9, 2020 10:54 AM IST
- FOLLOW US:
The Reserve Bank of India (RBI) on Friday left key interest rates unchanged for the second time in a row as expected, while maintaining an accommodative monetary policy stance, implying further rate cuts to come. if necessary to support the coronavirus-hit economy. .
The monetary policy committee (MPC) kept the repurchase rate, its key interest rate, at 4%, while the reverse repurchase rate or the key interest rate remained at 3.35%. The central bank has cut the repurchase rate by 115 basis points (bps) since the end of March. The MPC meeting was originally scheduled to end on October 1, but had to be rescheduled because the government failed to appoint three new external members to the panel after their terms ended last month.
In his first official estimate, RBI Governor Shaktikanta Das said that fiscal year 21 GDP growth could contract by 9.5%.
“See the contraction of GDP in fiscal year 21 by 9.5% … The RBI will maintain a comfortable liquidity position. The Indian economy enters a decisive phase in the fight against the coronavirus. The contraction of economic growth in the first quarter has been left behind; rays of light are visible, ”Das said at a press conference announcing the MPC’s decisions.
He added that the economy may experience positive GDP growth in the fourth quarter. “I am optimistic… we can dream of a better tomorrow. Global economic activity has recovered in the third quarter, albeit unevenly. Global financial conditions remain benign. The deep contraction of Q1 FY21 is behind us. India can renew its appointment with the pre-Covid growth trajectory, ”he said.
“The rural economy seems resilient. Food grain production is set to hit another record in fiscal year 21. Migrant labor is returning to work in urban areas. Online commerce is booming, people are returning to offices. Inflation would get closer to target in the fourth quarter. The mood is turning from fear and despair to hope … GDP growth may turn positive in the fourth quarter, “he added.
Sensex and Nifty went up shortly after the RBI announcement. The NSE Nifty 50 Index was up 0.14% to 11,850.65 as of 10:15 am IST, while the S&P BSE Sensex was up 0.18% to 40,258.93.
RBI had last revised its policy rate on May 22, in an off-policy cycle to stimulate demand by lowering the interest rate to a record low. The twenty-fifth rate setting MPC meeting with three new external members – Ashima Goyal, Jayanth R Varma and Shashanka Bhide – began on October 7. This was the first meeting of the new members who were appointed the day before the meeting. for a period of four years.
.
