Money

Repo rate left unchanged on fears of inflation: 6% GDP growth expected in 2020-21

New Delhi: The Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.15% on fear of inflationary pressure. The GDP growth rate was pegged at 6% for 2020-21.

The repo rate is the rate at which banks borrows from the RBI. The decision to keep the repo rate unchanged was taken by the six member Monetary Policy Committee (MPC) after deliberations. All the six members unanimously stood for not changing the rates of the repo rate.

The policy statement said, “The MPC recognises that there is policy space available for future action. The path of inflation is, however, elevated and on a rising trajectory through Q4:2019-20. The outlook for inflation is highly uncertain at this juncture. On the other hand, economic activity remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner.”

The decision of the MPC was determined by the fear of inflation. The inflation projection is at 6.5% for the fourth quarter. The committee said that some indicators of the economy have turned and point to a rise in economic activity. However, more data is needed to determine it.

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