RBI keeps repo rates unchanged, lowers GDP growth to 9.5%

Mumbai: In an attempt to support growth and keep inflation in check amidst the pandemic, the Reserve Bank of India (RBI) has kept its key policy rates unchanged. However, it further lowered its prediction for economic growth in the current fiscal year from the previously estimated 10.5 per cent to 9.5 per cent.

RBI Governor Shaktikanta Das informed at the end of the three-day Monetary Policy Committee meeting that started on June 1 that the repo rate or its lending rate shall be steady at four per cent while reverse repo or borrowing rate shall remain unchanged at 3.35 per cent. Both Marginal Standing Facility (MSF) rate and bank rates were kept unchanged from the last revision in May 2020 at 4.25 per cent.

As per RBI's annual report, "the conduct of monetary policy in 2021-22 would be guided by evolving macroeconomic conditions, with a bias to remain supportive of growth till it gains traction on a durable basis while ensuring that inflation remains within the target."

The Indian economy witnessed its worst contraction of over four decades in the last fiscal year when it recorded a contraction of 7.3%, with the services and industry sector contracting by 8.4 and 7 per cent, respectively. However, several economists hope for better days ahead as several states unlock in view of the falling number of covid cases.