Read the passage carefully and answer the questions based on the passage:

RBI Monetary Policy

The Reserve Bank of India, in its monetary policy meet decided to keep the key policy rates unchanged after two emergency rate cuts amid the COVID- 19 disruptions and its ensuing economic fall out. Consequently, the repo rate stands unchanged at 4% and the reverse repo rate at 3.35%. RBI noted that the economic activity had started to recover from the lows of April-May. Meanwhile, migrant labor is returning to work in urban areas, and factories and construction activities are coming back to life. This is also reflected in rising levels of energy consumption and population mobility. In cities, traffic intensity is rising rapidly; online commerce is booming; and people are getting back to offices. The mood of the nation has shifted from fear and despair to confidence and hope. Some of this optimism is being reflected in people's expectations. In September 2020, round of the RBI's survey, households expects inflation to decline modestly over the next three months, indicative of hope that supply chains are mending.

Why did Monetary Policy Committee keep its policy rate unchanged in its recent meet?

Due to recovery of economic activities.

The correct answer is Option (1) → Due to recovery of economic activities.

The passage clearly states that the Reserve Bank of India (RBI) observed signs of economic recovery—such as increased energy consumption, return of migrant labor, rising traffic, and a boom in online commerce. These positive indicators influenced the Monetary Policy Committee to keep the policy rates unchanged, signaling a cautious optimism about ongoing recovery rather than introducing further rate cuts.