RBI Keeps Repo Rate Unchanged at 5.15%, Pegs GDP Growth at 6%

Inflation rose to about five-and-half year high of 7.35% in December 2019, surpassing the RBI’s comfort level.

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The Reserve Bank of India (RBI) on Thursday, 6 February, kept the policy rate unchanged at 5.15 percent and maintained its stance as ‘accommodative’ at the end of the bi-monthly meeting of its monetary policy committee.

The top bank also pegged India’s GDP growth for 2020-21 at 6 percent.

The meeting, which commenced on Tuesday, is the first monetary policy meet after Budget 2020 and the last one for the fiscal year 2019-20.

A poll of economists conducted by news agency Reuters earlier suggested that the central bank would maintain status quo in view of retail inflation, which has now breached its target, showing signs of recovery in the economy.

Inflation rose to about five-and-half year high of 7.35 percent in December 2019, surpassing the RBI's comfort level.

The RBI had cut repo rates by 135 basis points, or 1.35 percent, over five straight meetings last year, before holding it at 5.15 percent in December.

"Right now, inflation is the main concern. We expect the RBI to hold rates on Thursday and see them pausing in April as well," the Reuters report quoted A Prasanna, economist at ICICI Securities Primary Dealership, as saying.

Prasanna had also said that the central bank's stance would remain accommodative, suggesting that it would "keep the option of one more rate cut open".

(With inputs from Reuters)

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