Reserve Bank of India keeps Repo rate, reverse repo rate unchanged

A Monetary Policy Committee (MPC) led by Reserve Bank of India’s (RBI) governor Shaktikanta Das has taken a decision to keep the repo rate and reverse repo rate unchanged.

At present, the repo rate stands at 4 percent whereas the reverse repo rate is 3.35 percent. The decision on the monetary policy has been announced after the first meeting of the MPC post-Budget 2021-22.

The six-member committee, headed by the RBI governor, feels that there is no need to make any change keeping in mind the inflation and economic recovery rates in the country.

Repo rate is the rate of interest at which the RBI lends money to commercial banks and reverse repo rate is a rate at which the RBI borrows money from the banks.

March 2020 onwards, the RBI has cut down its key lending rate by 115 basis points to provide some relief to the economy in the wake of the spread of coronavirus and countrywide lockdown.

In an off-policy cycle, the RBI had slashed its lending rate on May 22, 2020, when countrywide lockdown had caused unprecedented challenges before the economy.

Since then, as the economy is on an improving trajectory, the RBI has kept both the rates unchanged. Experts say that the RBI’s policy decision is on the expected lines and there is nothing to be very surprised about.

The Economic Survey Report presented just before the Budget 21-22, said that the Indian economy will bounce back by the next financial year with an 11 percent growth rate.

The manufacturing sector has shown some improved sentiments. Besides, many experts feel that the vaccination programme started by the government on January 16 has also helped to bring in some optimism in the economy.