Repo Rate unchanged at 4 Percent

#GS3 #Economy


The Reserve Bank of India's Governor Shaktikanta Das announced RBI bi-monthly Monetary Policy review on October 9, 2020. The RBI Governor announced the decisions taken by RBI's recently constituted Monetary Policy Committee (MPC).

  • The RBI Governor in address announced that the Monetary Policy Committee had decided to keep repo rates unchanged at 4 percent. 
  • The MPC has also decided to maintain an accommodative stance as long as required for growth. 
  • The RBI Governor also announced a host of new measures to be undertaken by the central bank.


Key Announcements

  • The MPC evaluated domestic and global macroeconomic and financial conditions and voted unanimously to leave the policy repo rate unchanged at 4 percent.
  • It also decided to continue with the accommodative stance of monetary policy as long as necessary at least during the current financial year and into the next year to revive growth on a durable basis and mitigate the impact of COVID-19, while ensuring that inflation remains within the target going forward.
  • The Marginal Standing Facility (MSF) rate and the Bank rate will remain unchanged at 4.25 per cent. The reverse repo rate will also remain unchanged at 3.35 per cent.


Global Economy

  • The RBI Governor stated that after a steep decline in the second quarter of 2020, global economic activity appears to have rebounded sequentially in the third quarter, but unevenly among and within economies.
  • He noted that there have been improvements in manufacturing, labour markets and retail sales powered strong recoveries in some countries, while in others rise in new infections prompted a slower pace of unlocking or reimposition of restrictions which, in turn, stalled the upturn.
  • He stated that while investment has remained in retrenchment, consumption and exports have started to improve. Massive policy support across all countries has prevented a deeper downslide, providing a floor underneath employment, household incomes and businesses. Financial conditions continue to remain benign.


Indian Economy

  • The RBI Governor stated that the Indian economy is entering into a decisive phase in the fight against COVID-19 pandemic. Several high-frequency indicators are pointing to the easing of contractions in various sectors of the economy and the emergence of impulses of growth.
  • The RBI Governor assured that by all indications, the deep contractions of Q1:2020-21 are behind us and silver linings are visible in the flattening of the active caseload curve across the country.
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