Reserve Bank of India keeps repo rate unchanged; predicts 6% GDP growth in next fiscal

PTI New Delhi Feb 06, 2020, 02.29 PM(IST)

Reserve Bank of India Photograph:( Reuters )

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RBI governor Shaktikanta Das said the central bank has many instruments to address the sluggishness in the economy

The Reserve Bank of India, for the second straight time, on Thursday kept its key policy rate unchanged at 5.15 per cent, maintaining its accommodative policy stance as long as it was necessary to revive growth.

Also Read: Reserve Bank of India cuts repo rate by 25 bps,  from 5.40 per cent to 5.15 per cent

The central bank retained GDP growth at 5 per cent for 2019-20 and pegged it at 6 per cent for the next fiscal.

"Economic activity remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner. Given the evolving growth-inflation dynamics, the MPC felt it appropriate to maintain status quo," the Monetary Policy Committee (MPC) said.

The six-member committee voted unanimously to hold rates, but also said that there is ?policy space available for further action?.
Between February and October 2019, the RBI had reduced repo rate by 135 basis points.

After leaving benchmark interest rates rates unchanged in the second consecutive policy review, RBI governor Shaktikanta Das said the central bank has many other instruments to address the sluggishness the economy, not just interest rates.

The Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy pegged GDP growth for FY21 at 6 per cent, but guided towards an uncertain inflation outlook.

In a January 31 release, the National Statistical Office (NSO) had revised down real GDP growth for FY19 to 6.1 per cent from 6.8 per cent provided in the provisional estimates of May 2019. Given this, the central bank noted that the economy is still plagued by deep output gaps.

"The RBI has several instruments to address the sluggishness in the growth momentum," Das told reporters at the customary post-policy conference. The monetary policy committee (MPC) kept the policy repo rate unchanged at 5.15 per cent, continuing with the accommodative stance to revive growth.

The governor said the continuity in policy from last pause should not be read as a pointer to future actions. "While the decision is as per expectations, it is important not to discount RBI," he said.