RBI keeps key Repo rate unchanged at 4%; predicts 2020-21 real GDP growth to be negative

Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday announced that the Monetary Policy Committee (MPC) of the RBI has decided to keep the repo rate unchanged at 4 percent. Das also said for the year 2020-21 as a whole, real GDP growth is also estimated to be negative.

"The accommodative stance of the monetary policy will continue as long as necessary to revive growth and mitigate the impact of the pandemic while ensuring that inflation remains within target going forward. The marginal standing facility rate and the bank rate remains unchanged at 4.25 percent and the reverse repo rate also stands unchanged changed at 3.35 percent", RBI Governor said while addressing the press.

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He also informed that RBI is perhaps the only central bank in the world that has set up a special quarantine facility for continuity of critical operations.

Real GDP growth will remain in the negative zone for now

"Taking into consideration all factors, the GDP growth in the first half of the year is estimated to remain in the contraction zone. For the year 2020-21 as a whole, real GDP growth is also estimated to be negative", Das said.

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Inflation to elevate during the second quarter

The RBI governor further said inflation is expected to be at elevated levels during the second quarter, however, may ease in the second half of the current fiscal year. He said that supply chain disruptions persist, resulting in inflation pressures across segments. He also said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival. Pinning hope on the agriculture sector, he said, Kharif crop harvest is expected to boost rural demand. Economic activity had started to recover, but a surge in coronavirus infections has forced imposition of lockdowns, he added.

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