RBI's monetary policy committee has decided to keep the repo rate unchanged at 4%. The central bank said that the decision to keep the repo rate unchanged was in consonance with the objective of achieving the medium-term target for CPI inflation of 4% within a band of (+/-) 2%.
Meanwhile, RBI has decided to continue its ‘accommodative stance’, which means a rate hike in the near-term is off the table. RBI Governor Shaktikanta Das said that the ‘accommodative stance’ is likely to continue to support growth in the country.
The central bank said that it expects India’s GDP to contract by 9.5%. In its previous policy i.e. in September, RBI had refrained from projecting any number on GDP growth and had said that India's GDP growth in FY21 will be in the negative zone.
Post today’s monetary policy meeting, however, RBI showed optimism and said a faster and stronger rebound is feasible, unless there is a second round of Covid-19 outbreak. In fact, RBI said that it expects GDP growth to turn positive by Jan-Mar.
On the shape of economic recovery, RBI Governor said that India is likely to see a 3-speed recovery i.e. there will be variation in recovery speed across sectors.
