RBI Monetary Policy: Amid Omicron scare, central bank keeps repo rate unchanged at 4% for ninth time
RBI Governor Shaktikanta Das said that the repo rate was unchanged for the ninth consecutive time while maintaining an ‘accommodative stance’ as long as necessary
The Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) on Wednesday decided to maintain a status quo on key rates and retained the repo rate at four percent as the new COVID-19 strain Omicron adds to economic uncertainties.
This announcement comes as India faces fresh threats from the Omicron variant. So far, India has reported over two dozen Omicron cases. This has forced several states to impose fresh travel restrictions while some warn that the Omicron surge could lead to the third wave of COVID-19 in the country.
During a press conference on Wednesday, RBI Governor Shaktikanta Das said that the repo rate was unchanged at 4 percent for the ninth consecutive time while maintaining an ‘accommodative stance’ as long as necessary. An accommodative stance refers to the willingness to either cut rates or maintain the status quo.
Das added that the MPC had voted unanimously and added that the reverse repo rate too was kept unchanged at 3.35 percent. The Marginal Standing Facility (MSF) rate and bank rate also remained unchanged at 4.25 percent.
The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The MPC said the policy stance will remain "accommodative" until there is sustainable recovery in the economy. An accommodative stance means the MPC is willing to either lower rates or keep them unchanged.
In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times. The repo rate, at which the RBI lends short-term funds to banks, was kept unchanged at four percent. The reverse repo rate, at which the RBI borrows from banks, was kept unchanged at 3.35 percent. The Marginal Standing Facility (MSF) rate was also kept unchanged at 4.25 percent.
After the Monetary Policy Committee meeting on 8 October, RBI Governor Shaktikanta Das had announced that the central bank would maintain an 'accommodative' stance on policy rates and would ensure that inflation remains within the target range.
With inputs from agencies
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