RBI leaves policy rates unchanged to support growth

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RBI focuses on growth

As expected, the Reserve Bank of India (RBI) in its first monetary policy committee meeting of this financial year left the repo rate – the rate at which banks borrow from the central bank-- unchanged at 4 per cent. RBI governor Shaktkanta Das said that the committee has also retained its 'accommodative' policy stance to support economic growth.

Last year, the RBI reduced rates by 135 basis points over five straight meetings to support economic recovery.

“As expected, the MPC voted unanimously to leave the policy repo rate unchanged at 4 per cent and assured continuation of accommodative stance well into FY22. This will complement the measures taken by the Govt in the recent budget to revive growth momentum in the economy. Despite the expansionary Budget, support from RBI is needed at this juncture to strike the right balance in ensuring enough liquidity in the system,” said Dhiraj Relli, MD &CEO, HDFC Securities.

The reverse repo rate or the short term rate at which the central bank borrows from the banks remained unchanged at 3.5 per cent.

The marginal standing facility -- a window for banks to borrow from the RBI in an emergency situation also remained unchanged at 4.25 per cent.

“The MPC expectedly kept the key rates unchanged unanimously and reiterated its accommodative stance both on rates and liquidity. Guidance has become more open-ended and state-based amid new uncertainties and evolving nature of the economy, stating policy stance will remain accommodative till growth recovers on durable basis,” Emkay Research said.