The Reserve Bank of India (RBI) on Friday in its October policy review meeting has decided to keep key lending rates unchanged. RBI governor Shaktikanta Das headed the six-member monetary policy committee (MPC) where they made the decision to keep the repo rate unchanged at 4% and reverse repo rate at 3.35% while maintaining the accommodative stance.
Repo rate refers to the rate at which RBI lends money to commercial banks if there is any shortfall of funds. While the reverse repo rate refers to the rate at which RBI borrows money from the commercial banks.
Maintaining the accommodative stance would enhance the money supply to boost the economy thus opening up possibilities for more future rate cuts.
RBI in its MPC meet said the Indian economy is moving towards the decisive phase in its battle against the Covid-19 pandemic.
Also Read: Biocon Foundation donates Rs 65 crore to build metro station in Bengaluru
The first quarter of the Indian Economy has shown contraction in growth but it is showing gradual improvement in growth. The focus of the nation now must shift from containment zones to reviving the economy, RBI Governor said.
The real GDP is expected to contract by 9.5% in the current fiscal year (2020-2021). On the other hand, the inflation may see a little ease to the projected target by the fourth quarter (Q4) of this year, mentioned Das in the MPC meeting.