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RBI Governor Raghuram Rajan leaves key policy rates unchanged

RBI GovernorThe Reserve Bank of India has left key repo rate unchanged at 6.75%. This was the last monetary policy meet before the upcoming Annual Budget, which will be presented on February 29.

RBI had left key rates unchanged in the fifth monetary policy meet too.

The cash reserve ratio has also been left unchanged at 4%.

The RBI said it will continue to provide liquidity under overnight repos at 0.25% of bankwise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75% of NDTL of the banking system through auctions; and continue with daily variable rate repos and reverse repos to smooth liquidity.

RBI Governor Raghuram Rajan had warned earlier against generating economic growth through additional debt saying that any deviation from the fiscal consolidation path will hurt the stability of the economy.

Rajan said that macroeconomic stability during the global turmoil cannot be risked and the government and RBI should continue to bring down inflation.

In 2015, the RBI has reduced repo rate by 125 basis points in about past one year.

The decision to keep key policy rates unchanged comes at a time when many stakeholders were rooting for a rate cut in the event of a slowdown in the economy, and with wholesale retail inflation in the negative zone for 14 months in a row.

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