New Delhi: Concerned over fresh cases of Covid-19 infection and rising inflation, the Reserve Bank of India (RBI) decided to keep the prime lending rate unchanged at four per cent, but at the same time cut further if needed to support the economy. Having maintained the liberal stance by speaking to. RBI Governor Shaktikanta Das, while announcing the decisions of the Monetary Policy Committee (MPC), said that the repo rate has been retained at four per cent.
“With the consensus of all, it was also decided that liberal stance will be maintained as long as necessary to sustain growth on a sustainable basis and efforts will continue to reduce the impact of Covid-19 on the economy,” he said. ” He said that it will be ensured that inflation remains within the target. Similarly, the marginal standing facility (MSF) rate and the bank rate remain unchanged at 4.25 percent. The reverse repo rate will also remain at 3.35 percent.
This is the first bi-monthly policy review meeting in the current financial year. The central bank has retained the growth target of 10.5 percent for the current financial year. Das said that the recent increase in Covid-19 transition has created uncertainty about the improvement in the economic growth rate. At the same time, he stressed the need to prevent the outbreak of virus and to pay attention to economic reforms. Das said that the central bank would ensure sufficient cash in the system, so that the productive sectors would get loans easily. He expected retail inflation to remain at 5.2 per cent in the first half of the current financial year.
With this, the central bank lowered the inflation estimate to five percent for the quarter ended in March. Das said major inflation remained at the five percent level in February 2021, although some factors pose a challenge to break the upper limit of easing (4 + 2%). He said that the situation of food inflation going forward will depend on the progress of monsoon. Das said that coordinated efforts by the Center and the states have brought some relief from domestic taxes on petroleum products.