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‘Recovery turning broad-based, warrants continued support’.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday kept the policy rate unchanged for the ninth time in a row and retained its accommodative stance to support the recovery in the economy which is yet to fully reach the pre-pandemic levels.

All members of the MPC voted to keep the repo rate – the key policy rate of RBI or the rate at which it lends to banks – unchanged at four per cent while one member, Jayanth Varma, dissented against retaining the accommodative policy stance. The continuing liberal monetary stance of the central bank and receding fears over Omicron boosted the stock markets with the BSE Sensex rallying by 1,016 points, or 1.76 per cent, to 58,649.68 and the Nifty rising 293 points at 17,469.75.

“Given the slack in the economy and the ongoing catching-up of activity, especially of private consumption, which is still below its pre-pandemic levels, continued policy support is warranted for a durable and broad-based recovery,” RBI Governor Shaktikanta Das said in a statement. The central bank also retained the reverse repo rate – the rate at which the RBI borrows from banks – at 3.35 per cent, indicating that it’s not yet ready for the normalisation of the accommodative policy.

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