Mumbai: The Reserve Bank of India (RBI) on Wednesday kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance in the backdrop of concerns over the emergence of the new coronavirus variant Omicron.
This is the ninth time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained the status quo. 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.
MPC has decided to keep benchmark repurchase (repo) rate at 4 per cent, Das said while announcing the bi-monthly monetary policy review.
Consequently, the reverse repo rate will continue to earn 3.35 per cent for banks for their deposits kept with RBI.
Das said 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.
RBI retained its growth projection at 9.5 per cent for the current fiscal despite concerns over Omicron.
Das also said the headline inflation would peak in the fourth quarter of the current fiscal.
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.
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.
Also read: RBI likely to keep lending rate at record low again over Omicron threat