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Status quo on repo rates, says RBI

Reserve Bank Governor Raghuram Rajan on Tuesday left borrowing costs unchanged but signalled a prospect of interest rate cut later this year if strong monsoon rains dampen inflation

Status quo on repo rates, says RBI
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Raghuram Rajan

Mumbai

He also emphasised that the need for more monetary transmission - passing on the rate cut benefits to borrowers - to support growth revival continues to be critical. In his penultimate bi-monthly monetary policy before his three-year term comes to an end on September 3, Rajan said the recent stronger-than-expected inflationary pressures from food and commodity prices brought considerable uncertainty. But strong monsoon rainfall and astute food management to increase supplies could offset those risks, he said. 

“Given the uncertainties, the Reserve Bank will stay on hold, but the stance of monetary policy remains accommodative,” he said, adding that RBI will monitor macroeconomic and financial developments for any further scope for policy actions. 

Accordingly, Rajan retained the short-term lending rate at 6.5 and the cash reserve requirement of banks at 4 per cent. Commenting on policy, Economic Affairs Secretary Shaktikanta Das said the policy unveiled is broadly in line with government’s expectations on growth and inflation.

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