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RBI keeps key policy rates unchanged
Why is it in news?
- The central bank kept the repo rate unchanged at 4 per cent and the reverse repo rate at 3.35 per cent.
Concept:
- Repo rate is the rate at which banks borrow from the RBI
- Reverse repo rate is the rate at which banks deposit excess funds with the RBI and earn interest on it.
Background:
- India’s GDP is set to contract in 2020-21.
- There was a supply chain disruptions across sectors along with a sticky surge in food prices.
- Consumer confidence turned more pessimistic in July than previous.
Details:
- RBI kept key policy rates unchanged in the face of rising inflation pressures.
- The central bank didn’t extend the moratorium on loan repayments offered to borrowers beyond August 31.
Inflation to stay elevated:
- Retail inflation, measured by the Consumer Price Index, rose to 6.09 per cent in June from 5.84 per cent in March.
- It breached the central bank’s medium-term target of 4 per cent, with a band of plus or minus two per cent.
- According to RBI's projection, inflation will continue to stay elevated.