ECONOMY

RBI keeps Repo Rate unchanged at 4%, assures accommodative stance amid Omicron fears

The Reserve Bank of India (RBI) on Wednesday kept benchmark interest rate unchanged at 4 per cent at the end of a three-day Monetary Policy Committee (MPC) meet today. It also decided to continue with its accommodative stance against the backdrop of concerns over the emergence of new Coronavirus variant Omicron. 


This is the ninth time in a row that the MPC, headed by RBI Governor Shaktikanta Das, has maintained the status quo. 


The RBI had last revised its policy Repo Rate or the short-term lending rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low. 


The MPC decided to keep benchmark Repurchase (Repo) Rate at 4 per cent, Mr Das said while announcing the bi-monthly monetary policy review on Wednesday. 


Consequently, the Reverse Repo Rate will continue to earn 3.35 per cent for banks for their deposits kept with the RBI. 


Mr Das said that the MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target. 


The RBI retained its growth projection at 9.5 per cent for the current financial year despite concerns over Omicron. 


Mr Das also said that headline inflation would peak in the fourth quarter of the current financial year. The inflation projection has been retained at 5.3 per cent for the current financial year. Retail inflation rose to 4.48 per cent in October from 4.35 per cent in September, mainly due to higher fuel and edible oil prices. 


The MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2026, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.

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