MPC maintains status quo on key rates
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The Monetary Policy Committee has decided to keep key rates unchanged amidst rising inflationary pressures.
“The MPC voted unanimously to keep the policy repo rate unchanged at 4 per cent. It voted with a 5:1 majority to continue with the accommodative stance as long as necessary to support growth,” RBI Governor Shaktikanta Das, who chairs the MPC, said on Friday after the bi-monthly meeting.
The six-member MPC has kept the repo rate (the interest rate at which banks borrow from the RBI to overcome short-term liquidity mismatches) steady at four per cent since it last cut this rate by 40 basis points from 4.40 per cent in May 2020.
Retail inflation has remained for two consecutive months above the RBI’s upper target range of six per cent. It stood at 6.36 per cent in June.
The MPC met in the shadow of the two recent inflation trends above the tolerance band of inflation target, Das said, adding that economic activity has broadly evolved in line with expectations in June and the economy is recovering from the second wave. Monsoon is doing well and some high-frequency indications are picking up.
Economic activity is likely to gather pace with progressive vaccination, he further said.
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