Maintaining status quo for the second time in a row, Reserve Bank of India (RBI) Monetary Policy Committee decided to hold key policy rates unchanged at existing levels on Friday amid high inflation. The central bank left the benchmark repurchase (repo) rate unchanged at 4 per cent, Governor Shaktikanta Das said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC). Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
“Monetary Policy Committee (MPC) voted unanimously to keep the policy repo rate unchanged at 4%. MPC also decided to continue with the accommodative stance of monetary policy as long as necessary at least through the current financial year & next year,” said RBI Governor Shaktikanta Das.
Marginal Standing Facility Rate & bank rate remains unchanged at 4.2% and the reverse repo rate stands unchanged at 3.35%: Shaktikanta Das, RBI Governor https://t.co/rmTmNXPLdE
— ANI (@ANI) October 9, 2020
“Marginal Standing Facility Rate & bank rate remains unchanged at 4.2% and the reverse repo rate stands unchanged at 3.35%,” he added.
He said MPC voted for keeping the interest rate unchanged and continued with its accommodative stance to support growth.
Three new external members in the panel voted in today’s decision. This was the first meeting of the new MPC which was formed after the appointment of three eminent economists – Jayant Verma, Ashima Goyal and Shashanka Bhide.
RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to a historic low. The 25th meeting of the rate-setting MPC with three new external members — Ashima Goyal, Jayanth R Varma and Shashanka Bhide — began on October 7. This is the maiden meeting of the new members who were appointed just a day before the meeting for a term of four years.
It is to be noted that MPC meeting earlier slated between September 29 and October 1 was deferred for the first time as the government failed to appoint external members before the scheduled date. The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the Governor, is made up of external independent members.
MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and lower tolerance of 2 per cent.