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8
February 2017
 |
RBI (The Total Investment & Insurance
Solutions)
India's
central bank on Wednesday kept key lending rates unchanged, as it shifted its
monetary policy stand from accommodative to neutral citing inflationary fears
and global uncertainties.
The
Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), during its third
bi-monthly monetary policy review -- the sixth and the final one for the fiscal
2016-17, kept the repurchase rate, or the short-term lending rate it charges on
borrowings by commercial banks, unchanged at 6.25 per cent. The Total Investment & Insurance Solutions
The
reverse repurchase rate automatically remained unchanged at 5.75 per
cent.
According
to RBI, all six members of the MPC panel, chaired by the RBI Governor Urjit
Patel, voted in favour of the monetary policy decisions -- the minutes of which
will be released on February 22, 2017. The Total Investment & Insurance Solutions
"On
the basis of an assessment of the current and evolving macroeconomic situation
at its meeting today, the MPC decided to keep the policy repo rate under the
liquidity adjustment facility (LAF) unchanged at 6.25 per cent," RBI said
in its sixth bi-monthly monetary policy statement. The Total Investment & Insurance Solutions
"Consequently,
the reverse repo rate under the LAF remains unchanged at 5.75 per cent, and the
marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent."
"The
decision of the MPC is consistent with a neutral stance of monetary policy in
consonance with the objective of achieving consumer price index (CPI) inflation
at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within
a band of +/- 2 per cent, while supporting growth." The Total Investment & Insurance Solutions
However,
the RBI projected a 7.4 per cent GVA (gross value added) growth for 2017-18 on
the back of higher capital expenditure earmarked in the Union Budget for
boosting the rural economy and affordable housing sectors.
The
central bank has estimated the GVA growth at 6.9 per cent for 2016-17.
Nevertheless,
investors showed their disappointment over the RBI decision to maintain status
quo on its key lending rates. The Total
Investment & Insurance Solutions
The
Indian equities provisionally closed on a flat note with the wider 51-scrip
Nifty of the National Stock Exchange (NSE) inching up by 0.75 points or 0.01
per cent to 8,769.05 points.
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