RBI Leaves Key Rates Unchanged Amid High Inflation

NEW DELHI: The Reserve Bank of India on Thursday left the repo rate and other key policy rates unchanged at existing levels amid a recent rise in consumer inflation, and said it would ensure retail prices are contained within its medium-term target going forward. Governor Shaktikanta Das said the RBI's Monetary Policy Committee decided to keep the key rates unchanged and maintain an "accommocative" stance unanimously. He said the "war against COVID-19 is most intense at the current juncture", stating that regulatory response has to be "dynamic, pro-active and balanced".

Here are key things to know:

1- With the status quo on key lending rates, the repo rate - or the rate at which the RBI lends short-term funds to commercial banks - currently stands at 4.0 per cent, and the reverse repo rate - or the rate at which the RBI borrows - at 3.35 per cent.

2- The decision on policy rates misses expectations of two-thirds of analysts in a poll by news agency Reuters who had predicted a 25-basis-point cut in the repo rate.

3- The central bank has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50 per cent.

4-In a virtual address to media, the RBI Governor said the country's real gross domestic product (GDP) is expected to remain in a contractionary mode in both the first half and the entire financial year 2020-21, which ends on March 31, 2021.

5- Mr Das said the Monetary Policy Committee expects inflation to remain at elevated levels in the July-September period, and ease in second half of the current financial year on account of "favourable base effect".