RBI keeps interest rate unchanged at 5.15 pc; pegs FY'21 growth at 6 pc

The Reserve Bank of India on Thursday opted for a status quo on benchmark interest rate after the Union Budget for 2020-21 slipped on fiscal deficit target and there were signs of hardening inflation amid an uncertain global environment.

The six member-Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das, for the second meeting in a row, kept repo rate unchanged at 5.15 per cent but maintained the accommodative policy stance which implies it was biased in favour of cutting rate to boost growth.

RBI kept GDP growth rate unchanged for the current fiscal at 5 per cent and projected a pick up in growth to 6 per cent in the next financial year.

The MPC upped its inflation outlook for the second half of the next fiscal by 0.30 per cent to 5.4-5 per cent and termed the outlook on price rise as "highly uncertain".

"Economic activity remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner. Given the evolving growth-inflation dynamics, the MPC felt it appropriate to maintain status quo," the MPC said.

The six member committee voted unanimously to hold rates but also said that there is "policy space available for further action".

In a comment on the budget proposals, it said, "the rationalisation of personal income tax rates in the Union Budget 2020-21, should support domestic demand along with measures to boost rural and infrastructure spending."