The Reserve Bank of India’s (RBI) has kept the benchmark lending rate unchanged at 4 per cent. The decision was taken anonymously at the meeting of the six-member Monetary Policy Committee (MPC), headed by Governor Shaktikanta Das. The decision to maintain status quo on the benchmark interest rate comes in the backdrop of global scare due to the new coronavirus variant Omicron.
The Governor said that the RBI will continue with an accommodative stance to revive and sustain growth on a durable basis. “Indian economy hauled itself out of its deepest contraction; we are better prepared to deal with COVID-19,” he said.
This is the ninth consecutive time since the rate remains unchanged. The central bank had last revised the policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.
The Indian economy remained on track to post the fastest growth among major economies this year as its GDP expanded by a better-than-expected 8.4 per cent in the July-September quarter to cross pre-pandemic levels. The GDP growth in the second quarter of the current fiscal (2021-22) was slower than the 20.1 per cent expansion in the previous quarter — which largely reflected a bounce back from last year’s crash — but was better than the contraction of 7.4 per cent in July-September 2020.
The RBI has been asked by the central government to ensure that the retail inflation based on the Consumer Price Index (CPI) remains at 4 per cent with a margin of 2 per cent on either side. The Reserve Bank had kept the key interest rate unchanged in its after monetary policy review in August citing inflationary concerns.
