Repo rate unchanged at 4%; GDP to contract by 9.5% in current FY: RBI governor
NEW DELHI: The Reserve Bank of India (RBI) on Friday decided to keep key lending rate unchanged in its October policy review meeting. The six-member monetary policy committee (MPC), headed by RBI governor Shaktikanta Das, kept repo rate untouched at 4 per cent; and reverse repo rate at 3.35 per cent while maintaining accommodative stance.
Repo rate is the rate at which the RBI lends to banks, while reverse repo rate is at which it borrows from banks.
Indian economy entering into decisive phase in fight against coronavirus, the RBI governor said after the MPC meet.
Contraction in economic growth of Q1 behind us, silver linings are visible. Focus must shift from containment to reviving economy, he added.
Inflation may ease to projected target by Q4 (fourth quarter) of FY21; while GDP (gross domestic product) growth may break out of contraction and enter positive zone by Q4 of current fiscal, Das further mentioned.
Das also stated that real GDP expected to contract by 9.5 per cent in the current fiscal (2020-21).
MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.
The fast-changing macroeconomic environment and the deteriorating growth outlook necessitated off-cycle meetings of the MPC -- first in March and then again in May 2020.
The MPC had cumulatively cut the repo rate by 115 basis points (bps) over these two meetings, which resulted in total policy rate reduction of 250 bps since February 2019, with an aim to boost economic growth.
The central bank has been taking steps proactively to limit the damage to the economy caused by the pandemic and subsequent lockdowns.
When the RBI cuts rates, banks are expected to pass on the benefit to customers and reduce interest rates on home, auto, personal or other loans which may result in lower EMIs (equated monthly instalments).
India is suffering more because of the mismanagement and incompetence of Surrender Modi and his go nment.
RBI prediction is very pessimistic in the eyes of Dalal Street movement- We strongly feel GDP will be lower value but in the Positive range.
With respect to RBI, we feel their projection will be wrong at the end of Financial Year closing. Their prediction based on mainly urban India growth. They never give due weightage to rural India 's GDP contribution.
RBI shall direct all Banks to fix uniform interest rates for lending and , deposits.
Muralidhar M S
RBI lowered rates months ago. But Banks have not transferred this benefit to Home loan customers. RBI should penalize these banks.
Interest rate in bank is 5.4% on fixed deposit. On top of it, 30% loss due to income tax. So effective interest rate is 3.7%.Inflation is 7%.Loan rate is 9%.
Never expect anything good under this GOVT.
Achhe Din. 5$ Trillion? What a joke.
Maths puzzle: At negative 9.5% GDP growth rate who can help us become 5 trillion economy?
RBI Governor puppet of Fekuu....ACHEE Din is totall lies by Feku darpok 56inch
5 Trillion economy .. !!!
We are not worried about GDP ....arnab cowsami will divert ppl with new suicide stories ....one day before elections godi will announce we already achieved 5 trillion economy ....
Please lower interest rates and encourage business to borrow and generate employment, Without generating employment there is no hope for the future.
Very dumb decision. When GDP is -24% and market sentiments at its lowest the best RBI can do in such a situation is to encourage borrowing with low interest rate.
The nation has no hope .
RBI should bring interest rates further down in Indian economy, because high interest rates are against our constitutional values. Rich can become more rich without any effort and enterprise. And ordinary people who are willing to give hard effort and generate ideas are not getting capital or at high prices. Policies in favor of rich going on since mughal, British and Congressi, co unists era. That's why more than 75% super rich in western countries are of ordinary background but in India 90% ... Read More
wish our India good luck .. pray to God for best to happen for our country
Total economic chaos created by Tamil Brahmins like Raghuraman, Nirmala etc.
You cannot expect miracle from RBI
All accrued problems together with present stalled economy.