The Reserve Bank of India (RBI) on Friday left key interest rates unchanged at record lows and announced new measures to support the economy after the nascent recovery was pummelled by the devastating second wave of Covid-19 infections.
It brought down its forecast for economic growth by 100 basis points to a 9.5 per cent real GDP growth in the current fiscal year ending March 31, 2022, while the inflation forecast was bumped up by 10 bps to 5.1 per cent.
The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das voted unanimously for keeping repo rate - RBI’s key lending rate - unchanged at 4 per cent, and the reverse repo rate - the borrowing rate - at 3.35 per cent.
“The MPC was of the view that at this juncture policy support from all sides is required to gain the momentum of growth that was evident in the second half of 2021, and to nurture the recovery after it has taken root,” Das said.
It decided to retain an accommodative policy stance “as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy,” signaling there is still room to cut rates further.