RBI Keeps Repo Rate at 4%

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The Reserve Bank of India (RBI) on Friday kept its key lending repo rate at 4% and left the reverse repo rate or its borrowing rate unchanged at 3.35%, for the fourth time in a row, and said the monetary policy committee (MPC) continues to maintain the policy stance as ‘accommodative’ to support growth and keep inflation at the targeted level.

The central bank kept the rates steady at record low levels as widely expected. RBI reiterated that it will continue to support the recovering economy by ensuring ample rupee liquidity in the banking system.

The repo rate has been cut by a total 115 basis points since March 2020 to cushion the shock from the coronavirus pandemic, following a 135 bps reduction since the beginning of 2019.

Domestic shares hit all-time highs earlier on Friday, ahead of RBI’s decision. The NSE Nifty 50 index rose 0.74% to 15,005.95 and the S&P BSE Sensex was up 0.7% at 50,979.82. Both the indexes scaled record highs early on Friday.

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