RBI first Monetary Policy after Budget: No respite to home and auto loan borrowers; RBI keeps interest unchanged at 4%

New Delhi: Home and auto loan borrowers will have to continue with their current EMIs that are unlikely to come down in the near term as the Reserve Bank of India on Thursday kept the key policy rates unchanged in its bi-monthly Monetary Policy review. This policy review comes just nine days after the 2022 budget announcements. This is also the last policy review of the financial year 2021-22.

The central bank announcing the outcome of its bi-monthly Monetary Policy rates on February 10 said that it has decided to keep the repo rate unchanged at 4 percent and the reverse repo rate at 3.35 percent.

Repo is the rate at which RBI lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation. The reverse repo rate is the rate at which the RBI borrows from banks.

The MPC kept the key benchmark rate unchanged in its last nine reviews. This is the tenth time in a row that MPC has decided to keep the policy rate unchanged. RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rates to a historic low.

The 6-membered MPC voted unanimously for keeping interest rate unchanged and decided to continue with its accommodative stance as long as necessary to support growth and keep inflation within the target.

The six-member Monetary Policy Committee headed by Reserve Bank of India Governor Shaktikanta Das started deliberations on the bi-monthly policy review on Tuesday. The meeting was originally scheduled to take place 7-9 February, but was rescheduled to 8-10 February after Maharashtra Government declared February 7 a public holiday to mourn the death of legendary singer Lata Mangeshkar.