"The need of the hour is not to drop our guard and to remain vigilant against any possibility of a third wave, especially in the background of rising infections in certain parts of the country," Shaktikanta Das asserted in his virtual address.
With today's decision, the RBI has kept the key benchmark rates unchanged in the Monetary Policy for the seventh time. The central bank last cut its policy rates on May 22, 2020, in an off-policy cycle when the covid-19 pandemic first shook the country.
All 61 economists polled by Reuters late last month had said they see no change in the repo rate which has been steady at 4 per cent since May last year.
The Reserve Bank of India's real GDP growth projection of 9.5 per cent for the current fiscal consists of 21.4 per cent in the first quarter, 7.3 per cent in the second quarter, 6.3 per cent in the third quarter and 6.1 per cent in the fourth quarter of 2021-22.
"Although investment demand is still anaemic, improving capacity utilisation and congenial monetary and financial conditions are preparing the ground for a long-awaited revival," the RBI Governor asserted.
RBI's GDP estimates come in the backdrop of a reduction in GDP forecast for India amid looming concerns over a possible third wave. Last week, the International Monetary Fund lowered its 2021-22 economic growth forecast for India by 300 basis points to 9.5 per cent from the earlier 12.5 per cent.
In the previous monetary policy review on June 4, the RBI itself had cut its estimates for GDP growth for the current fiscal to 9.5 per cent from the earlier 10.5 per cent.
The banking regulator highlighted that economic activity has started normalising and private consumption is witnessing an improvement. "We are in a much better position compared to June 2021..Need to remain vigilant on possibility of a third wave," the Governor said.
The Reserve Bank has slashed its key lending rates i.e. repo rate by 115 basis points since March 2020 to cushion the economy from the aftershock of coronavirus.
Meanwhile, the RBI has projected CPI inflation at 5.7 per cent during 2021-22, consisting of 5.9 per cent in the second quarter, 5.3 per cent in the third quarter and 5.8 per cent in the fourth quarter of 2021-22. The CPI inflation for the first quarter of 2022-23 has been projected at 5.1 per cent.
The Reserve Bank maintained the key interest rates unchanged for the seventh straight time and retained the GDP growth target at 9.5 per cent, while asserting that the country was "in a much better position compared to June 2021." The repo rate would be unchanged at 4 per cent and the reverse repo rate would remain at 3.35 per cent, the RBI Governor Shaktikanta Das said at the end of the bi-monthly Monetary Policy Committee (MPC) review meeting. The central bank also decided to maintain an "accommodative" stance as the economy is yet to recover from impact of second Covid wave.