The Reserve Bank of India on Wednesday left the key policy rates constant in its bi-monthly Monetary Policy review, which means that home and car loan borrowers would have to continue paying their present EMIs.
On December 8, the central bank announced that it has chosen to hold the repo rate at 4% and the reverse repo rate at 3.35 % for the next bi-monthly Monetary Policy rates.
Commercial banks may borrow cash from the Reserve Bank of India (RBI) at the repo rate. The central bank utilizes it as a means of controlling inflation. The rate at which the RBI borrows money from banks is known as the reverse repo rate.
Eight out of the previous ten reviews by the MPC showed no change in the key rate. The MPC has opted to maintain the policy rate unchanged for the ninth time in a row. Off-cycle, the Reserve Bank of India (RBI) reduced interest rates to a record low on May 22, 2020, in an effort to stimulate demand.
An unanimity among the MPC’s six members favored keeping borrowing costs low in the short term in order to encourage economic growth and maintain inflation within the 2% target range.