India Central Bank Keeps Interest Rates Unchanged As Pandemic Worries Remain

By Shakir Husain NEW DELHI, Dec 8 (Bernama) -- India's central bank on Wednesday kept its key interest rates unchanged as it continues to pursue an easy monetary policy to support economic growth during the pandemic. The recovery interrupted by the second COVID-19 wave earlier this year is regaining traction, but "it is not yet strong enough to be self-sustaining and durable," Reserve Bank of India (RBI) governor Shaktikanta Das said. "This underscores the vital importance of continued policy support," he added. The RBI's Monetary Policy Committee (MPC) left the lending rate, or the repo rate, unchanged at 4 per cent, and the borrowing rate, or the reverse repo rate, untouched at 3.35 per cent. Downside risks to India's economic outlook have risen with the emergence of the Omicron variant and renewed surges of COVID-19 infections in a number of countries, the central bank chief said in a statement. The Indian economy faces challenges from higher global energy and commodity prices, potential volatility in global financial markets due to a "faster normalisation of monetary policy" in developed countries, and prolonged global supply bottlenecks, Das said. The RBI retained its projection for real GDP growth at 9.5 per cent for the 2021-22 financial year ending March 31. In domestic worries, private investment and consumption remain at pre-pandemic levels and higher input costs are adding to inflation pressures. Inflation in October rose to 4.5 per cent from 4.3 per cent in September, while it is estimated to be 5.7 per cent in the final January-March quarter, with the full-year projection at 5.3 per cent. -- BERNAMA