Repo rate unchanged at 4%, surge in Covid-19 subdued early signs of revival: RBI governor Shaktikanta Das

The Reserve Bank of India (RBI) on Thursday left the repo rate unchanged at four per cent after the meeting of its six-member Monetary Policy Committee (MPC). The reverse repo rate was also kept unchanged at 3.3 per cent, RBI governor Shakti Kanta Das said at a press conference.

“The renewed surge of Covid-19 infection in major economies in July has subdued early signs of revival that had appeared in May and June,” Das said.

All major sectoral indexes, except autos, were trading higher ahead of RBI Governor Shaktikanta Das’s policy address.

There was expectation that the RBI will cut the repo rate, at which it lends funds to banks. This was the 24th meeting of the MPC.

The fast-changing macroeconomic environment and the deteriorating growth outlook necessitated off-cycle meetings of the MPC - first in March and then again in May 2020.

The MPC has cumulatively cut the repo rate by 115 basis points over these two meetings, resulting in total policy rate reduction of 250 basis points since February 2019, with an aim to boost economic growth.

The central bank has been taking steps proactively to limit the damage to the economy caused by the pandemic and subsequent lockdowns.

The central bank mainly factors in the Consumer Price Index (CPI) while formulating the monetary policy.Higher prices of food items, especially meat, cereals and pulses, pushed the CPI-based retail inflation to 6.09 per cent in June.

The inflation rate for July will be announced on August 12.