RBI Governor Shaktikanta Das, during a presser at 12 noon today, said the MPC had decided to keep the key lending rate or repo rate unchanged at 4 per cent. He said other rates, including reverse repo rate (3.35 per cent) have also been kept unchanged while keeping the stance "accommodative".
He said the GDP growth in the first half of the year is estimated to remain contracted. For the year 2020-21 as a whole, the real GDP growth is also estimated to be negative.
The MPC believes the CPI inflation will remain elevated during the current July-September quarter, the Governor added. Supply chain disruptions persist, resulting in inflation pressures across segments, RBI Governor Shaktikanta Das said while announcing the decisions taken by the central bank's MPC.
He added the continuous rise in COVID-19 cases have subdued revival in major economies across the world and that the global economic activity remained fragile.
Pinning hope on the agriculture sector, he said, Kharif crop harvest is expected to boost rural demand. Economic activity had started to recover, but a surge in coronavirus infections has forced imposition of lockdowns, he added.
Notably, the RBI has already cut repo rate by 115 bps ever since the COVID-19 pandemic hit the country in March. Last year, the RBI had cut repo rate by 135 bps as growth continued to recede.
The RBI is perhaps the only central bank in the world, which has set up a special quarantine facility for continuity of critical operations, Das said.
The MPC in its last policy meeting in May had decided to cut key repo rate by 40 basis points to 4 per cent from 4.4 per cent earlier.