RBI cuts growth forecast for 2021-’22 to 9.5%, keeps repo rate unchanged at 4%

The Reserve Bank of India on Friday kept the key lending rate or the repo rate unchanged at 4% and reverse repo rate or its borrowing rate at 3.35%. This is the sixth consecutive time that the central bank has maintained status quo.

Announcing the decisions of monetary policy committee, at the end of its three-day bi-monthly meeting, RBI Governor Shaktikanta Das said they will maintain the accommodative policy stance as long as necessary to revive growth and to mitigate the impact of the coronavirus pandemic. He added that the decision to maintain status quo on lending rates was taken unanimously by the panel.

The repo rate is the rate at which the central bank lends to its clients generally against government securities. The reverse repo rate, on the other hand, allows banks to deposit funds with the RBI and earn interest on it.

The RBI has cut the repo rate by a total of 115 basis points since March 2020 to support the economy during the coronavirus crisis. In 2019, the central bank slashed rates by 135 basis points.

“The MPC was of the view that at this juncture policy support from all sides is required to gain the momentum of growth that was evident in the second half…

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