The Reserve Bank of India's Monetary Policy Committee (MPC) on Friday kept repo rate unchanged at 4 per cent for the fourth time in a row, while reverse repo rate was also kept unchanged at 3.35 per cent.
The central bank will maintain an accommodative monetary policy stance, at least through the current financial year and into the next year, to support growth, mitigate the impact of COVID-19 pandemic, and keep inflation at the targeted level, Reserve Bank of India (RBI) Governor Shaktikanta Das said.
The RBI also kept Marginal Standing Facility (MSF) rate and the bank rate unchanged at 4.25 per cent. Das said the decision to keep the rates unchanged was taken unanimously.
The Governor announced a two-phase restoration of cash reserve ratio (CRR) for banks to 4 per cent. CRR will be restored to 3.5 per cent from 3 per cent currently effective from March 27, 2021 and to 4 per cent from May 22, 2021.
Saying that the outlook on growth has turned positive and signs of recovery in the economy are strengthening further, Das projected 10.5 per cent GDP growth for 2021-22.
"Consumer confidence is reviving and business expectations of manufacturing, services and infrastructure remain upbeat. The movement of goods and people and domestic trading activities are growing at a robust pace," he said.
On inflation, Das said vegetable prices are likely to remain soft in near-term and revised RBI's CPI projection for January-March 2021 to 5.2 per cent, while pegging it at 5.2-5 per cent for April-September 2021 and 4.3 per cent for October-December.
This was the first MPC meeting after the presentation of Union Budget 2021-22 on February 1. The RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low amidst the coronavirus pandemic.