RBI maintains status quo; keeps repo rate unchanged

The Reserve Bank today kept the key policy rate unchanged at 6 per cent for the fourth consecutive time since August last year in view of uncertainties around inflation.

The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.

"The MPC decided to keep the policy repo rate on hold and continue with the neutral stance. The MPC reiterates its commitment to achieving the medium term target for headline inflation of 4 per cent on a durable basis," said the first bi-monthly monetary policy for 2018-19.

The repo rate, at which the central bank lends short-term money to other banks, will continue to stay at 6 per cent. The reverse repo, rate at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 per cent.

The headline inflation after surging to a concerning 5.2 per cent in December last year, cooled off to 5.07 per cent in January and further to 4.4 per cent in February.

RBI has been asked by the government to target inflation at 4 per cent, plus or minus 2 per cent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate).