India’s central bank yesterday kept borrowing costs at a record-low for the ninth straight meeting, amid concern over the Omicron variant of SARS-CoV-2 posing renewed risks to economic recovery globally.
The Monetary Policy Committee (MPC) voted to keep the benchmark repurchase rate at 4 percent, as predicted by all 35 economists surveyed by Bloomberg.
The six-member panel voted 5-1 to retain its accommodative policy stance as long as is necessary, reflecting a continued bias to support economic growth given inflation is within target.
“Our motto is to ensure soft landing that is well timed,” Reserve Bank of India Governor Shaktikanta Das said in a live Web cast.
The central bank also kept the reverse repo rate — the level at which it absorbs excess cash from lenders — unchanged at 3.35 percent, he said, in his first policy speech after being reappointed for a second three-year term.
With infections from the Omicron variant spreading fast, several nations are weighing varied degrees of pandemic controls that could throttle demand.
“The MPC regarded the accentuation of headwinds emanating from global developments as the main risk to domestic outlook, which is now somewhat clouded by the Omicron variant of the COVID-19,” Das said. “Given the slack in the economy and the ongoing catching up of activity, especially of private consumption, which is still below its pre-pandemic levels, continued policy support is warranted for a durable and broad-based recovery.”
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