RBI Monetary Policy: Key Rates Left Unchanged as RBI Aims to Keep Inflation under Control
RBI MPC has kept key rates unchanged as the main aim of the Reserve Bank of India right now is to keep inflation under control. In the earlier policy meets, RBI panel had worked to increase liquidity so that ailing businesses and individuals with financial troubles could get funds from banks. Banks have been urged to give more credit by RBI and the Finance Ministry in the recent times, mainly due to economic stress caused by COVID-19 pandemic.
As per RBI MPC, the repo rates will remain unchanged at 4 percent and reverse repo rate at 3.35. In its statement, RBI said, “Further space for monetary policy action was available but it would be advisable to be judicious.”
MSME sector will also get support for loan restructuring for the units that need help. Inflation was major focus for RBI MPC. RBI said that inflation is expected to remain at high levels and the current aim is to keep it under control.
Borrowing costs have been at their lowest levels in a decade and RBI feels that keeping the rates at this level will be sufficient to keep the lending in check and at optimal levels.
RBI Governor Shaktikanta Das added, “Domestic food inflation has remained elevated across economies ever since the coronavirus outbreak.”