The Monetary Policy Committee of the Reserve Bank of India (RBI) on Friday kept the repo rate unchanged at four per cent, said RBI Governor Shaktikanta Das.
Consequently, the reverse repo rate, at which the RBI borrows from lenders, stood at 3.35 per cent.
The RBI decided to maintain its accommodative monetary policy stance to support growth amid the pandemic.
He said that the Indian economy was entering into a “decisive phase” in the fight against Covid-19.
The RBI projected the country’s GDP to contract 9.5 per cent in the current financial year, which ends in March 2021.
Governor Shaktikanta Das said a “silver lining is visible and mood of the nation has shifted from despair and fear to confidence and hope”.
“Modest recovery in first half of the year could further strengthen in second half… economic activity to gain traction in third quarter,” Das was quoted as saying by PTI.
The RBI Governor said inflation is likely to remain at elevated levels in September, and ease in the third and fourth quarters of current financial year.
Kharif sowing has surpassed last year’s acreage, food grain is set to to be a record, migrant workers are returning to work and the population mobility as well as energy consumption increasing, he said in a virtual address to the media.
RBI was forced to postpone the bi-monthly meeting of the MPC scheduled for September 29, 30 and October 1 as the government failed to nominate its three members to the six-member panel.
MPC is the statutory committee that fixes the key policy interest rate and monetary policy stance of the country as well as the inflation target.
The tenure of the three members appointed by the government in 2016 expired after the previous policy on August 6.
(With agency inputs)