RBI monetary policy review: RBI keeps interest rates unchanged

RBI monetary policy review: RBI keeps interest rates unchanged

Reserve Bank of India (RBI) Governor Raghuram Rajan on April 1, 2014 kept the key policy rate (repo) unchanged since retail inflation still remains “sticky” but introduced steps to increase liquidity and contain volatility in the money market.

RBI-Reserve-Bank-of-IndiaIn the first bi-monthly monetary policy statement for 2014-15, the RBI Governor decided to pause and not disturb status quo. The repo rate, the central’s bank main policy rate and the rate at which it lends money to banks, remained at 8 per cent. Other policy instruments such as cash reserve ratio also remain unchanged at 4%.

The RBI has decided to increase the liquidity provided under 7-day and 14-day term repos from 0.5 per cent of Net demand and term liabilities (NDTL) of the banking system to 0.75 per cent, and decrease the liquidity provided under overnight repos under the LAF from 0.5 per cent of bank-wise NDTL to 0.25 per cent with immediate effect.

India’s consumer price index inflation eased to 8.10 percent in February, near the RBI’s January 2015 target of 8 percent, while the wholesale price index slowed to a 9-month low of 4.68 percent.

The RBI wants CPI inflation to ease further to 6 percent by January 2016.

The RBI expects real GDP growth to be in a range of 5 to 6 per cent in 2014-15.

India’s consumer price index inflation eased to 8.10 percent in February, near the RBI’s January 2015 target of 8 percent, while the wholesale price index slowed to a 9-month low of 4.68 percent.

The RBI wants CPI inflation to ease further to 6 percent by January 2016.

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