RBI Keeps Repo Rate Unchanged At 4%

On Thursday, RBI's monetary policy committee decided to leave the policy repo rate unchanged at 4 percent. The accommodative stance continues.

As part of the emergency response towards the pandemic, RBI has cut the key lending rate by 1.15 percent since March.

A rate cut was highly expected as the central bank tries to support an economy which is expected to contract this financial year.

A 5 to 9 percent contraction in GDP (gross domestic product) is expected as per estimates from various experts. According to rating agency ICRA, the economy could contract by 9.5 percent in financial year 2020-21.

Those who oppose the rate cut are highlighting the rising inflation fears. The consumer price index (CPI)-based inflation for the month of June as per government data has worsened to 6.09 percent, exceeding RBI's target, due to spike in the prices of certain food items. In March CPI was reported at 5.84 percent.