The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday kept policy rates unchanged and maintained an accommodative stance to help the economy deal with the adverse impact of the COVID-19 pandemic.
The key lending rate of the RBI or the repo rate was left unchanged at 4% while the reverse repo rate, or the rate the RBI pays when funds are parked with it, stayed at 3.35%.
The RBI has also projected the ongoing GDP contraction to narrow to 7.5% this fiscal with the economy returning to growth of 0.1% in Q3 and expanding 0.7% in Q4 of FY21.
Governor Shaktikanta Das, while announcing the policy, said inflation still remains a concern as RBI sees core inflation remaining sticky. He projected retail inflation to average 6.8% in Q3, before moderating to 5.8% in Q4.
The RBI also announced a host of measures for liquidity management and to deal with exchange rate risks.
The central bank has slashed the repo rate by 115 basis points (bps) since late March to cushion the shock from the novel coronavirus crisis and the sweeping lockdowns to check its spread.