RBI maintains accommodative stance, leaves repo rate unchanged at 4%; hints at future relaxations

RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to historic low.

Press Trust of India August 06, 2020 13:31:00 IST
RBI maintains accommodative stance, leaves repo rate unchanged at 4%; hints at future relaxations

The Reserve Bank of India (RBI) on Thursday opted for a status quo and left interest rates unchanged, but maintained an accommodative stance, implying more rate cuts in future if the need arises to support the economy hit by the COVID-19 crisis.

The benchmark repurchase (repo) rate has been left unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank's Monetary Policy Committee (MPC).

Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their parked deposits kept with the RBI.

He said the MPC voted for keeping interest rate unchanged and continued with its accommodative stance to support growth.

RBI had last revised its policy rate on 22 May, in an off-policy cycle to perk up demand by cutting interest rate to historic low.

The RBI also said that the inflation is expected to be at elevated levels during the second quarter, but may ease in the second half of the current fiscal year.

Das said that the supply chain disruptions persist, resulting in inflation pressures across segments. He also said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival.

Pinning hope on the agriculture sector, he said, Kharif crop harvest is expected to boost rural demand. Economic activity had started to recover, but a surge in coronavirus infections has forced imposition of lockdowns, he added.

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