Monetary policy committee: RBI holds key rates to boost recovery

Repo rate unchanged at 4% and reverse repo at 3.35%

The Reserve Bank of India (RBI) on Wednesday kept its key policy repo rate and “accommodative” stance unchanged, and said it would lean more on the variable rate than its traditional fixed-rate liquidity absorption facility to drain out excess liquidity from the banking system.

Many economists saw it as a stealth reverse rate hike, even as the central bank kept its reverse repo rate untouched at 3.35 per cent.

However, by activating most of the money absorption through the 14-day variable reverse repo rate (VRRR) window, complemented by the 28-day reverse repo, the traditional fixed rate reverse repo tool is