RBI Pegs FY21 GDP Growth At 6%, Keeps Repo Rate Unchanged

by GoNews Desk 4 years ago Views 3017

RBI Pegs FY21 GDP Growth At 6%, Keeps Repo Rate Un
The Reserve Bank of India on Thursday projected the GDP growth rate for the financial year 2020-21 at 6% while retaining the estimated growth rate for 2019-20 at 5%, the slowest in 11 years.

At its Monetary Policy Committee (MPC) meeting today, the RBI decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15%. The repo rate is the interest rate at which the RBI lends to commercial banks.

“Consequently, the reverse repo rate under the LAF remains unchanged at 4.90%,” the RBI’s sixth bi-monthly statement of 2019-20 said. The reverse repo rate is the rate at which the central bank borrows money from commercial banks.

All six MPC members voted in the favour of the decision, the statement said.

On the basis of an assessment of the current and evolving macroeconomic situation, the MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth while ensuring that inflation remains within the target.

It also revised consumer inflation upwards to 6.5% for the fourth quarter of 2019-20 and expected 5%-5.4% in the first half of 2020-21; and 3.2% in the third quarter.

Retail inflation surged from 4.6% in October to 5.5% in November and further to 7.4% in December 2019, the highest reading since July 2014, the statement said.

Food inflation increased from 6.9% in October to 12.2% in December, primarily caused by a spike in onion prices due to unseasonal rains in October-November, it said.

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