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RBI leaves interest rates unchanged

More rate cuts in future likely if the need arises to support the Covid-induced economy
RBI Governor Shaktikanta Das

Our Bureau, Agencies   |   Calcutta   |   Published 06.08.20, 01:36 PM

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.

The RBI MPC met at a time when the Indian economy lost momentum after showing a slight revival in the month of June.

After 250 basis points cut in the last 1.5 years, including 115 basis points cut in the repo rate since the coronavirus pandemic began, the rates are at the bottom of the cycle. However, the credit growth has remained tepid amid the pandemic; and albeit the transmission is gaining pace, it is not adequate.

The governor 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 May 22, in an off-policy cycle to perk up demand by cutting interest rate to historic low.

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