The Reserve Bank of India (RBI) on Friday kept key interest rates unchanged and maintained an accommodative stance in order to aid further economic recovery. 

The central bank’s Monetary Policy Committee (MPC) decided to keep the Repo Rate unchanged at 4 per cent, while the Reverse Repo Rate has been maintained at 3.35 per cent. 

RBI Governor Shaktikanta Das said that the MPC would maintain status quo till the economy recovered from the impact of the second wave of the COVID-19 pandemic. But Mr Das clarified that the country was in a much better position, and that many economic indicators had improved. 

“The need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave, especially in the background of rising infections in certain parts of the country,” Mr Das said in a virtual address accompanying the MPC’s decision. 

“The economy is recovering from the setback of the second wave of COVID-19, and economic activity will pick up with progress in vaccination,” he added. However, the central bank governor said that more was needed to be done to restore the supply-demand balance in the economy. 

Mr Das added that a good monsoon and improving economic indicators were likely to support economic growth in the future. The RBI’s announcement is in line with what analysts had predicted earlier. 

It may be noted that the RBI has kept key interest rates unchanged for the seventh consecutive time. The growth forecast for FY22 has also been retained at 9.5 per cent. 

The central bank governor also indicated that inflation was gradually coming under control even as fuel prices remained at a record high. He said that the improving economic activity with the ebbing of the second wave, and consumption, investment and external demand had been gaining as a result. Mr Das added that the financial markets had also benefited due to improvement in economic activity.