Editor's Pick: RBI indicates its priority

The Hindu Newsletter - Newsletter - subject [The Hindu Logo]( [Facebook]( [Twitter]( [Youtube]( [Linkedin]( [Instagram]( Saturday 05, December 2020 [alt_text]( Editor's Pick RBI prioritises economic growth by holding rates steady [alt_text]( (The Editor's Pick is a new newsletter from The Hindu that provides a snapshot of the most important stories from today's edition of our newspaper, along with a note from our top editors on why we chose to give prominence to these stories.) The Reserve Bank of India has [kept the key lending rate unchanged at 4%]( in its latest monetary policy announcement. The central bank also revised its estimate on GDP for the current financial year, saying that it would contract by 7.5% instead of the 9.5% it had predicted in October. The RBI has retained the 4% repo rate despite inflation being above the central bank's comfort levels. Repo rate, or the rate at which RBI lends to commercial banks, is a key tool in controlling inflation. Higher repo rates often cause banks to hike the interest rates on their loans. This reduces borrowing, reducing the cash available with people and companies to spend, which in turn drives down prices. The RBI's reasoning is that the current inflation is due to supply disruptions and retailers selling at high margins, which could be managed independently. In fact, the RBI has said that it will maintain an accommodative rate policy going forward, which means it is unlikely to announce a rate hike in the near future. Lower interest rates would mean more cash flows into the economy, spurring growth. On the economic front, the RBI is projecting a 0.1% growth in the third quarter and 0.7% in the fourth, ending the technical recession of the economy in the first two quarters. With this announcement, the RBI has made it clear that its priority is economic growth. Though excess cash in the system has its own problems, the accommodative policy will be a spur for various sectors to start borrowing towards larger projects that will push the country out of the pandemic-induced contraction. This is what makes the story important. The Big Story [All-party meeting | COVID-19 vaccine in next few weeks, says Narendra Modi]( [alt_text]( From the Front Page [alt_text]( [Farmers front calls for Bharat Bandh on December 8]( [alt_text]( 'Remarks by Canadian PM unacceptable' From the Opinion Pages [alt_text]( [The many layers to agricultural discontent]( [alt_text]( [A regressive agenda, a new low in governance]( Today's Editorials [Trust deficit: On MSP and the ne](ed for a legal guarantee [Star turn: On Rajinikanth’s part](y You are receiving this email because you are a user of [thehindu.com]( If you do not wish to receive any such emails, [unsubscribe here.](mailto:rm-0b43urccbf2f90kaup33rtbysa8hku5@newsalert.thehindu.com?subject=Unsubscribe&body=You will be unsubscribed from our mailing list.) To ensure you continue to receive emails from The Hindu in your inbox, please add newsletters.th@newsalert.thehindu.com to your contact. If you can't see the mailer, please [click here.]( Group Sites [The Hindu]( | [இந்து தமிழ் திசை]( | [Business Line]( | [BL on Campus]( | [Sportstar]( | [Frontline]( | [The Hindu Centre]( | [Images]( | [roofandfloor]( | [Classifieds]( Copyright @ 2020 ,THG PUBLISHING PVT LTD. [About Us]( | [Contact Us]( | [Digital Subscription](