The Reserve Bank of India on Thursday decided to leave the key repo rate unchanged at four per cent, after recent reductions. The marginal standing facility rate and the bank rate also remain unchanged at 4.25%.

The Monetary Policy Committee voted unanimously to leave the policy repo rate unchanged at 4%, said RBI Governor Shaktikanta Das.

The MPC noted that in India too economic activity had started to recover from the lows of April and May. However, fresh infections had forced fresh lockdowns, so high-frequency economic indicators have levelled off.

Imports fell sharply in June, reflecting weak domestic demand and low crude oil prices, noted the MPC.

India’s forex reserves have increased by 56.8 billion dollars in this financial year to 536.6 billion dollars as on July 31, 2020.

Supply chain disruptions persist, with protein-based food items and vegetables could remain a pressure point for inflation, despite a bumper crop expected.

Real GDP growth in the first half of year is estimated by the MPC to remain in contraction mode. In 2020-21, it is expected to be negative. An early containment of the pandemic may provide an upside.

Consumer confidence turned more pessimistic in July than previous surveys, so demand is expected to remain anaemic.

While the space for further monetary policy action is available, it is judicious to conserve it at a more opportune time. So the MPC decided to maintain the policy rates on hold, said Mr. Das.

The RBI is perhaps the only central bank facility in the world to create a special quarantine facility for its officers and service providers to ensure continued banking services, Mr. Das said.