The Reserve Bank of India (RBI) on Thursday said inflation is expected to be at elevated levels during the second quarter. There are fair chances that the inflation may ease in the second half of the current fiscal year.
Supply chain disruptions persist, resulting in inflation pressures across segments, RBI Governor Shatikanta Das said while announcing the decisions taken by the central bank’s Monetary Policy Committee (MPC).
RBI maintained the key lending rates, leaving them unchanged. Accordingly, the Monetary Policy Committee of the central bank maintained the repo rate — or short-term lending rate for commercial banks at 4%. The MPC voted to maintain accommodative stance, thus opening up possibilities for more future rate cuts.
He also said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival. He also said that Kharif crop harvest is expected to boost rural demand. Economic activity had started to recover, but a surge in COVID-19 infections has forced imposition of lockdowns.