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Tuesday, September 30, 2014

Reserve Bank of India keeps key rates unchanged

The Reserve Bank of India did not spring up any surprise move in its fourth bi-monthly monetary policy review. The central bank has kept key rates unchanged.
This is the fourth consecutive time that the RBI has kept key interest rates unchanged despite clamours from the industry to cut rates to boost economy. The short-term lending rate (repo) rate now stands at 8 per cent, and the cash reserve requirement of banks at 4 per cent. The statutory liquidity ratio (SLR) has also been retained at 22 per cent.
The RBI also retained the growth projection for the current fiscal at 5.5 per cent. The apex bank sees FY16 growth at 6.3 per cent.
Explaining the rationale for status quo policy, Rajan said though WPI inflation has ebbed to levels consistent with 8 per cent inflation by January 2015, "there are risks from food price shocks as the full effects of the monsoon's passage unfold, and from geo-political developments that could materialise rapidly."

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