Reserve Bank keeps repo rate unchanged at 4%

The marginal standing facility (MSF) rate and the Bank Rate too remain unchanged at 4.25 per cent.

The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

The decisions of the MPC are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, an RBI press release said.

Turning to the growth outlook, "the recovery in the rural economy is expected to be robust, buoyed by the progress in kharif sowing. Manufacturing firms responding to the Reserve Bank’s industrial outlook survey expect domestic demand to recover gradually from Q2 and to sustain through Q1:2021-22. On the other hand, consumer confidence turned more pessimistic in July relative to the preceding round of the Reserve Bank’s survey. External demand is expected to remain anaemic under the weight of the global recession and contraction in global trade," the release said.

For the year 2020-21, as a whole, real GDP growth is expected to be negative, the MPC noted.

Fibre2Fashion News Desk (RKS)