New Delhi: Reserve Bank of India (RBI) governor Shaktikanta Das kept the benchmark (repo) rate unchanged at 4 percent on Thursday and maintained his accommodative stance to support economic growth amid the ongoing Covid-19 pandemic. Announcing the policy decision, which was delayed a day after Lata Mangeshkar’s death, Das invoked a song by the legendary singer to convey “an eternal message.”
She died on February 6 at Mumbai’s Breach Candy Hospital at the age of 92.
“As the great Lata Mangeshkar – whom we lost recently – sang in her immortal voice: ‘aaj phir jeene ki tamanna hai† Together with the spirit behind the next line of this beautiful song, she has conveyed an eternal message of optimism,” said the RBI governor.
Das also said: “We live in a world of Knightian uncertainty in the absence of certain knowledge about the next mutation of Covid-19. The ability to predict the future course of the economy is so dependent on the evolution of the virus that one prognosis is as good or as bad as the others and just as fleeting If the last two years of living with the virus have taught us anything, it is to remain humble, but grounded in self-confidence, and never lose faith and optimism. “
In economics, Knightian uncertainty is a lack of quantifiable knowledge about a possible event, as opposed to quantifiable risk. It is an admission of imperfect knowledge that makes future events essentially unpredictable. The phenomenon is named after the American economist Frank Knight.
Furthermore, RBI also kept the borrowing rate (reverse repo) unchanged at 3.35%.
This is the tenth time in a row that the Monetary Policy Committee (MPC) headed by Mr. Das has upheld the status quo. RBI last revised its policy repo or short-term bond yield on May 22, 2020, in an off-policy cycle to boost demand by driving interest rates to historic lows.
RBI maintained its growth forecast at 9.2 percent and inflation at 5.3 percent for the current fiscal year.
The next MPC meeting is scheduled for April 6-8, 2022.