RBI holds interest rates steady, GDP growth projected at 10.5% for next fiscal

The repo rate was held at 4% while the reverse repo rate was left unchanged at 3.35%.

The Reserve Bank of India kept rates steady at record low levels as widely expected on February 5 and reiterated that it will continue to support the recovering economy by ensuring ample rupee liquidity in the banking system.

This was the fourth time in a row that the RBI was leaving interest rates unchanged.

The repo rate or RBIโ€™s key lending rate was held at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.

The repo rate has been cut by a total 115 basis points since March 2020 to cushion the shock from the pandemic, following a 135 bps reduction since the beginning of 2019.

RBI Governor Shaktikanta Das said, โ€œthe Central bank would maintain accommodative monetary policy stance to support growth, keep inflation at targeted level.โ€ He added that inflation has returned to tolerance band (of 4%).

โ€œOutlook on growth has turned positive; signs of recovery strengthen further,โ€ Mr. Das said.

He said the GDP growth was projected at 10.5% for next fiscal.

โ€œThe Budget has provided impetus to health and infra sectors. Vegetables prices likely to remain soft in near term; inflation to be revised to 5.2 pc in Q4 of FY21.โ€

With inputs from PTI.

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