Reserve Bank of India keeps rates at record low as virus lashes economy

MUMBAI: The Reserve Bank of India (RBI) kept interest rates steady at record lows on Friday and reiterated its commitment to keeping policy accommodative as a ferocious second wave of COVID-19 infections threatens to derail the country's economic recovery.

The RBI held the repo rate, its key lending rate, at 4% and kept the reverse repo rate, the borrowing rate, unchanged at 3.35%.

In a Reuters poll, all 51 economists surveyed had expected the RBI's monetary policy committee (MPC) to leave rates unchanged.

RBI Governor Shaktikanta Das said all six members of the MPC voted in favour of keeping rates on hold and maintaining an accommodative monetary policy stance.

"The MPC was of the view that at this juncture policy support from all sides is required to gain the momentum of growth that was evident in the second half of 2021 and to nurture the recovery after it has taken root," Das said.

India's annual economic growth rate picked up in January-March compared with the previous three months, but economists are increasingly pessimistic about the June quarter after a huge second wave of COVID-19 infections hit the country last month.

The RBI unveiled fresh measures in May to help lenders tide over mounting bad loans and give some borrowers more time to repay their debts, as surging COVID-19 cases triggered strict lockdowns in several states.

The central bank has slashed the repo rate by a total of 115 basis points (bps) since March 2020 to soften the blow from the pandemic.

The country's benchmark 10-year bond yield was mostly flat, while Indian rupee traded mostly unchanged against the dollar.

The NSE Nifty 50 index and the S&P BSE Sensex slightly inched up by 0.2% to 15,722 and 52,357.80, respectively, by 0443 GMT.