RBI holds rates on inflation risk
MUMBAI, Aug 6: India's central bank kept interest rates on hold on Thursday, as it sought to contain a rise in retail inflation though it vowed to keep policy sufficiently loose to help revive growth in the coronavirus-battered economy.
Reserve Bank of India (RBI) Governor Shaktikanta Das said space for monetary policy easing remains, but the central bank will ensure inflation stays within its target range.
To ease debt strains on companies and lenders, the RBI said it would allow restructuring of corporate loans by banks, a move that was widely awaited by the industry.
The repo rate INREPO=ECI was left at 4.0per cent and the reverse repo rate INRREP=ECI at 3.35per cent. Two-thirds of analysts in a Reuters poll had predicted a 25 basis point cut in the repo rate, while the rest saw no change.
The RBI has already reduced the repo rate by a total of 115 basis points since February, on top of the 135 basis points in an easing cycle last year, from 6.50per cent.
"Given the uncertainty surrounding the inflation outlook and extremely weak state of the economy in the midst of an unprecedented shock from the ongoing pandemic, the MPC decided to keep the policy rate on hold," Das said. -Reuters