Reserve Bank of India (RBI) Governor Shaktikanta Das announced the policy decision today, at the end of the scheduled review of the Monetary Policy Committee (MPC) that began on Wednesday, August 4, as it evaluates the economy which is in a nascent stage of recovery from the deadly second wave of the COVID-19 pandemic.
RBI's monetary policy committee voted unanimously to maintain the repo rates - the key interest rates at which the RBI lends money to commercial banks - steady at four per cent. The reverse repo rate - the rate at which the RBI borrows money from banks, was also unchanged at 3.35 per cent.
The central bank retained the gross domestic product (GDP) growth projection for the current fiscal at 9.5 per cent, however, given inflationary concerns, it increased the CPI inflation estimate to 5.7 per cent from 5.1 per cent.
The economy witnessed a record contraction of 7.3 per cent for the previous fiscal 2020-21, recording its worst-ever performance in over four decades. Recently, the International Monetary Fund (IMF) trimmed India's growth projection from 12.5 per cent to 9.5 per cent for the current fiscal. Among all countries, India witnessed the largest drop in growth projections made by IMF, even as the global economic growth rate remains the same at six per cent.
This is the third bi-monthly monetary policy review for the financial year 2021-22, at a time when the country stares at a looming threat of a third wave of the pandemic amid a slow pace of vaccination coverage.
Here are the highlights from today's RBI Governor Shaktikanta Das-led Monetary Policy Committee meeting:
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