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RBI Monetary Policy: Repo rate unchanged at 4%, accommodative stance as long as necessary.

RBI Monetary Policy 2021: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged at 4 per cent while maintaining an ‘accommodative stance’ as long as necessary to mitigate the impact of the COVID-19 pandemic, RBI Governor Shaktikanta Das announced Wednesday.

The RBI governor announced that the decision was taken unanimously and added that the reverse repo rate too was kept unchanged at 3.35 per cent.

The Indian central bank was widely expected to keep key interest steady amid a surge in COVID-19 cases in the country. According to a recent Reuters poll, 65 of 66 economists surveyed said the MPC will leave rates unchanged.

Last week, the government had asked the RBI to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five-year period ending March 2026.

This is the fifth time in a row that the RBI has maintained a status quo on policy rate. Das said that the central bank will keep inflation at the targeted level and also added that the recent rise in COVID-19 cases has created uncertainty over economic growth recovery.

The RBI governor said that the focus must be on containing the spread of coronavirus and towards economic recovery. He added that the RBI will ensure ample liquidity in system so that productive sector gets adequate credit.

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