MUMBAI: The Monetary Policy Committee (MPC) of The Reserve Bank of India (RBI) on Friday kept key interest rates unchanged and maintained an accommodative stance in order to aid further economic recovery while raising the retail inflation forecast for 2021-22 to 5.7 per cent due to supply-side constraints, high crude oil and raw materials cost.

In June the central bank had pegged the retail inflation estimate at 5.1 per cent for the current financial year. It has the mandate to keep inflation in a band of 2-4 per cent, with a tolerance level of 2 per cent on either side.

On the key rates, the central bank’s MPC has decided to keep the Repo Rate unchanged at 4 per cent, while the Reverse Repo Rate has been maintained at 3.35 per cent. It is worth noting that RBI has kept key interest rates unchanged for the seventh consecutive time. The growth forecast for FY 2021-22 has also been retained at 9.5 per cent. 

Das said in a virtual address accompanying the MPC’s decision, “The need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave, especially in the background of rising infections in certain parts of the country.”  

“The economy is recovering from the setback of the second wave of COVID-19, and economic activity will pick up with progress in vaccination,” he added. However, the central bank governor said that more was needed to be done to restore the supply-demand balance in the economy. 

Das also added that a good monsoon and improving economic indicators were likely to support economic growth in the future. The RBI’s announcement is in line with what analysts had predicted earlier.