RBI keeps repo rate unchanged at 4 percent, maintains accommodative stance to support growth

Repo rate or repurchase rate is the interest rate at which RBI lends to commercial banks. It is the key tool of the central bank to contain inflation or price rise by regulating the supply of money in the economy.

"Based on assessment of the evolving macro economic and financial conditions and the outlook, the MPC (Monetary Policy Committee) voted unanimously to maintain status quo with regard to the policy repo rate and by a majority of 5-1 to retain the accommodative policy stance," RBI Governor Shaktikanta Das said, while announcing the bi-monthly monetary policy on Friday.

"Policy repo rate remains unchanged at 4 percent and the stance remains accommodative 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 while ensuring that inflation remains within the target going forward.

"The Marginal Standing Facility (MSF) rate and bank rate remain unchanged at 4.25 per cent. The reverse repo rate also remains unchanged at 3.35 per cent," added the RBI Governor.

Most high-frequency data such as monthly merchandise exports, air traffic and factory output show that the economy is well on track and picking up pace on the back of wider coverage of vaccines against Coronavirus.

"Growth impulses seem to be strengthening and we derive comfort from the fact that the inflation trajectory is turning out to be more favourable than anticipated. In spite of global headwinds, we hope to emerge from the storm and sail towards normal times steered by the underlying resilience of the macroeconomic fundamentals of the Indian economy," Das said.