The Reserve Bank of India's Monetary Policy Committee decided to hold key rates at existing levels on Friday citing elevated inflation, as widely expected. In a virtual address to the media after the scheduled review by the MPC, RBI Governor Shaktikanta Das said the central bank will continue to remain accommodative for as long as necessary to revive growth and mitigate the impact of COVID-19. It will also ensure inflation remains within the target going forward, the RBI chief said, stating that the current stance of policy will continue for at least the current financial year and into the next year. The status quo on policy comes at a time when the country's GDP contracted a record 23.9 per cent in the April-June period.
The economy is likely to shrink 9.5 per cent in the current financial year, the RBI Governor said. He said the country is entering a decisive phase in the fight against coronavirus, but the contraction witnessed in the fiscal first quarter is "behind us".
"The MPC is of the view that revival of the economy from an unprecedented COVID-19 pandemic assumes the highest priority in the conduct of monetary policy," Mr Das said.