Citing uncertainty over inflation, RBI keeps repo rate unchanged

Quoting the uncertainty and concerns over the inflation rate, the Reserve Bank of India (RBI) has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 percent, during their second bi-monthly policy statement for the year 2016-17 fiscal year in Mumbai on Tuesday.

rbi rates policy

The reverse repo rate will remain at 6 percent and so do the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 percent. The apex bank also said that their monitory policy stance remains accommodative. Owing to the unchanged statistics, the markets didn’t respond much towards the announcement as rupee and BSE Sensex traded at slightest of variations earlier on Tuesday.

A press release by RBI has accessed that following the first bi-monthly statement earlier in April, the global economic growth is uneven and is struggling to regain its track. World trade has remained muted and economic growth in USA has slowed in Q1 of the financial year due to contracting industrial activity and exports.

In Europe, the GDP has raised strongly running on the backdrop of robust consumer spending and recovering employment and business conditions. China has sequentially slowed their economic growth in Q1, according to the press release. The third bi-monthly policy will be announced by RBI on August 9, 2016.

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