RBI lowers GDP growth forecast to 6% for FY21 Mumbai: The Reserve Bank on Thursday expectedly left interest rates unchanged amid uncertain inflation outlook but left the door open for more easing in future even as it took steps to spur credit growth in an economy facing its worst slowdown in over a decade.
With all six members of the RBI Governor Shaktikanta Das- led Monetary Policy Committee voting unanimously, the repurchase or repo rate was maintained at 5.15 per cent while retaining its accommodative stance.
With food prices driving retail inflation to a more than five- year high of 7.35 per cent in December, the central bank raised its inflation projection for the six months to September to 5- 5.4 per cent from 3.8- 4 per cent previously while terming the outlook on price rise as u201c highly uncertainu201d. The RBI cut its policy rate by 135 basis points over five s t r a i g h t meetings last year, before hitting the pause button in December on inflationary concerns.
The RBI stuck to its prediction of 5 per cent GDP growth in the current fiscal u2014 the lowest in 11 years but lowered its growth forecast for the first half of the coming financial year to 5.5- 6 per cent from its December projection of 5.9- 6.3 per cent. For the full 2020- 21 fiscal, it put the GDP growth at 6 per cent, which is at the lower end of the 6- 6.5 per cent expansion projected by the governmentu2019s Economic Survey.
To boost credit growth, it scrapped the mandatory requirement for banks to set aside cash of 4 per cent for every new loan extended to retail automobiles, residential housing, and small businesses till July 2020. There is a need for u201c adjustmentu201d in interest rates on small saving schemes, the MPC said. The government is likely to revise small savings rates downward in the coming quarter beginning in April.
Agencies RBI Governor Shaktikanta Das. pic/ pt i
