RBI Keeps Lending Rates Unchanged at 6.75 Percent

The RBI has kept its key policy rates unchanged at 6.75 percent in line with stake-holders expectations.

Ahead of the federal budget for the next fiscal, India’s central bank on Tuesday kept its key lending rates unchanged at 6.75 percent in line with stakeholders expectations.

The Reserve Bank of India (RBI) kept the repo and reverse repo rates unchanged at 6.75 per cent and 7.75 per cent, respectively, during its sixth and the fiscal’s final bi-monthly monetary policy review.

The RBI also expects inflation at around 5 percent for the fiscal year ending 2017.

The Reserve Bank continues to be accommodative even as it leaves the policy rate unchanged in this review, while awaiting further data on the development of inflation. Structural reforms in the forthcoming Union Budget that boost growth while controlling spending will create more space for monetary policy to support growth, while also ensuring that inflation remains on the projected path of 5 per cent by the end of 2016-17. 

Raghuram Rajan, RBI Governor

Here are some of the highlights from the monetary policy statement:

• Cash reserve ratio (CRR) unchanged at 4 percent
  
• Marginal standing facility rate and Bank Rate at 7.75 percent
  
• Policy to remain accommodative if fiscal side helps
  
• Reforms in Budget to create space for rate cut
• Expects FY17 inflation at around 5 percent

• FY16 growth pegged at 7.4 percent and FY17’s at 7.6 percent
• RBI to create a special ecosystem for startup funding
  

(With inputs from PTI and IANS)