RBI 24th Monetary Policy Committee Meet: No Change in Repo Rate, Reverse Repo Rate, Announces RBI

New Delhi: The RBI announced that the policy repo rate will remain unchanged at 4 per cent. The reverse repo rate will also remain unchanged — 3.3 per cent. Also Read – RBI 24th Monetary Policy Committee Meet: What to Expect Today?

“The accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of COVID-19 pandemic while ensuring that inflation remains within target going forward,” RBI Governor Shaktikanta Das said. “Monetary Policy Committee (MPC) noted that in India too, economic activity had started to recover, but surges of fresh infections have forced fresh lockdowns, hence several high-frequency indicators have levelled off,” Das said. Also Read – Fifth Tranche of Sovereign Gold Bond Scheme Opens For Subscription From Today: 10 Things to Know

“Taking into consideration all factors, the GDP growth in the first half of the year is estimated to remain in the contraction zone. For the year 2020-21 as a whole, real GDP growth is also estimated to be negative,” he said. Also Read – Extreme Risk Aversion to Have Adverse Outcomes: RBI Governor

The central bank has been taking steps proactively to limit the damage to the economy caused by the pandemic and subsequent lockdowns. As per a research report by SBI, banks have cut rates on fresh loans by 72 basis points, the fastest transmission ever recorded.

SBI has cut by an equivalent 115 basis points on its repo-linked retail loan portfolio.

The government has tasked RBI to keep inflation at 4 per cent (+, – 2 per cent). The central bank mainly factors in the Consumer Price Index (CPI) while formulating the monetary policy.

Higher prices of food items, especially meat, cereals and pulses, pushed the CPI-based retail inflation to 6.09 per cent in June. The inflation rate for July will be announced on August 12.

Experts are of the view that the MPC would maintain an accommodative stance on monetary policy in view of the fast-changing macroeconomic environment.

The monetary policy was in an accommodative mode even before the outbreak of COVID-19, with a cumulative repo rate cut of 135 basis points between February 2019 and the onset of the pandemic.