India: RBI keeps interest rates untouched, accommodative stance continues

Mumbai - The Reserve Bank cites the need to support ongoing growth recovery amid continued uncertainty and global financial market volatility.

The Reserve Bank of India (RBI) on Friday kept the repo rate unchanged for the seventh time straight and continued with an accommodative stance, citing the need to support ongoing growth recovery amid continued uncertainty and global financial market volatility.

The announcement came after a three-day meeting of its Monetary Policy Committee (MPC). The central bank has cut policy rates by 115 basis points since February 2020.

The repo rate - the central bank's lending rate - remains unchanged at 4 per cent and the 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.

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 visibly sticky. The price build-up in global commodities, especially for those whose prices are a pass-through into the domestic market, has put significant pressure on both retail and wholesale inflation since January.

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