Repo rate unchanged

RAJAN RANJANRepo rate remain the same. In line with market expectations, RBI governor Raghuram Rajan on Tuesday kept the repo rate unchanged at 6.75%. The cash reserve ratio (CRR) or the amount of deposits banks park with RBI has also been unchanged at 4 per cent.  “The Reserve Bank will use the space for further accommodation, when available, while keeping the economy anchored to the projected disinflation path that should take inflation down to 5 per cent by March 2017,” Rajan said.
“The Reserve Bank will follow developments on commodity prices, especially food and oil, even while tracking inflationary expectations and external developments. The implementation of the Pay Commission proposals, and its effect on wages and rents, will also be a factor in the Reserve Bank’s future deliberations, though its direct effect on aggregate demand is likely to be offset by appropriate budgetary tightening as the Government stays on the fiscal consolidation path. In the meantime, since the rate reduction cycle that commenced in January, less than half of the cumulative policy repo rate reduction of 125 bps has been transmitted by banks.

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