New Delhi: The Reserve Bank of India’s monetary policy committee on Friday morning decided to keep key policy rates unchanged, even as growth appears set to recover and as rising inflation continues to pose challenges.Consequently, the repo rate stays at 4%, while the reverse repo rate remains unchanged at 3.35%.“The MPC decided to continue with accommodative stance of the monetary policy as long as necessary, at least till the current financial year and into next year to revive growth on a durable basis and mitigate the impact of COVID-19 while ensuring that inflation remains within target,” said RBI governor Shaktikanta Das.The central bank believes that Q3 and Q4 for FY’21 will see some GDP growth at 0.1% and 0.7% respectively – while the real GDP projection for the full year is -7.5%.Inflation, however, is not far from the MPC’s mind.“The MPC is of the view that inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables. This constrains monetary policy at the current juncture from using the space available to act in support of growth,” the committee’s statement noted.“At the same time, the signs of recovery are far from being broadbased and are dependent on sustained policy support. A small window is available for proactive supply management strategies to break the inflation spiral being fuelled by supply chain disruptions, excessive margins and indirect taxes. Further efforts are necessary to mitigate supply-side driven inflation pressures. Monetary policy will monitor closely all threats to price stability to anchor broader macroeconomic and financial stability.”Also read: Online Outages: RBI Stops HDFC Bank From Digital Launches, Sourcing New Credit CardsAccording to government data, India’s retail inflation rose to its highest level in October 2020 in more than six years, primarily on the back of higher food prices.CPI (consumer price index) data showed that inflation stood at 7.61% in October, the highest since May 2014, while retail inflation was recorded at 7.27% in September.“The outlook for inflation has turned adverse relative to expectations in the last two months. The substantial wedge between wholesale and retail inflation points to the supply-side bottlenecks and large margins being charged to the consumer. While cereal prices may continue to soften with the bumper kharif harvest arrivals and vegetable prices may ease with the winter crop, other food prices are likely to persist at elevated levels,” the MPC statement noted.“Crude oil prices have picked up on optimism of demand recovery, continuation of OPEC plus production cuts and are expected to remain volatile in the near-term. Cost-push pressures continue to impinge on core inflation, which has remained sticky and could firm up as economic activity normalises and demand picks up. Taking into consideration all these factors, CPI inflation is projected at 6.8 per cent for Q3:2020-21, 5.8 per cent for Q4:2020-21; and 5.2 per cent to 4.6 per cent in H1:2021-22, with risks broadly balanced…”