<p>Reserve Bank of India on Friday kept the key policy interest rates unchanged for the third time as inflation and its outlook remained elevated and the signs of economic recovery far from being broad-based.</p>.<p>The repo rate at which banks borrow from the RBI was kept unchanged at 4% but the central bank assured of more rate cuts in the future if the Covid-19-hit economy needed more support.</p>.<p>“Inflation is likely to remain elevated… This constrains the monetary policy at the current juncture from using the space available to act in support of growth,” Governor Shaktikanta Das said, announcing the monetary policy.</p>.<p>However, the RBI revised its growth outlook upward to 7.5% contraction in the financial year 2020-21 as opposed to its October forecast of 9.5% decline.</p>.<p>Sensex hit a record high of 45,000 first time after RBI upgraded GDP forecast. Banking stocks surged.</p>.<p>The governor said strained by the pandemic, the commercial banks will not give out dividends this year and retain all of their profits.</p>.<p>He also assured the central bank will use various instruments at appropriate time to ensure ample liquidity is available in system.</p>.<p>Recovery in rural demand is expected to strengthen further while urban demand is gaining momentum, Das said adding the economy was recuperating faster with more sectors joining recovery path.</p>.<p>“The horizon has lighted up with a spate of positive news around vaccines and steady rise in recoveries. India's time has come to break free of the fetters of Covid-19 and reconfigure our destiny,” Das said giving the stock market a leg up.</p>.<p>On price rise, however, he said the outlook had turned adverse.</p>.<p>“The outlook for inflation has turned adverse relative to indications last two months. The MPC sees the inflation at 6.8% for Q3 (September-December) and 5.8% for Q4," Das said.</p>.<p>The retail inflation rose to 72 months high of 7.6% in October on the back of elevated food prices.</p>
<p>Reserve Bank of India on Friday kept the key policy interest rates unchanged for the third time as inflation and its outlook remained elevated and the signs of economic recovery far from being broad-based.</p>.<p>The repo rate at which banks borrow from the RBI was kept unchanged at 4% but the central bank assured of more rate cuts in the future if the Covid-19-hit economy needed more support.</p>.<p>“Inflation is likely to remain elevated… This constrains the monetary policy at the current juncture from using the space available to act in support of growth,” Governor Shaktikanta Das said, announcing the monetary policy.</p>.<p>However, the RBI revised its growth outlook upward to 7.5% contraction in the financial year 2020-21 as opposed to its October forecast of 9.5% decline.</p>.<p>Sensex hit a record high of 45,000 first time after RBI upgraded GDP forecast. Banking stocks surged.</p>.<p>The governor said strained by the pandemic, the commercial banks will not give out dividends this year and retain all of their profits.</p>.<p>He also assured the central bank will use various instruments at appropriate time to ensure ample liquidity is available in system.</p>.<p>Recovery in rural demand is expected to strengthen further while urban demand is gaining momentum, Das said adding the economy was recuperating faster with more sectors joining recovery path.</p>.<p>“The horizon has lighted up with a spate of positive news around vaccines and steady rise in recoveries. India's time has come to break free of the fetters of Covid-19 and reconfigure our destiny,” Das said giving the stock market a leg up.</p>.<p>On price rise, however, he said the outlook had turned adverse.</p>.<p>“The outlook for inflation has turned adverse relative to indications last two months. The MPC sees the inflation at 6.8% for Q3 (September-December) and 5.8% for Q4," Das said.</p>.<p>The retail inflation rose to 72 months high of 7.6% in October on the back of elevated food prices.</p>
