TIL Desk Business/Mumbai/ RBI today unexpectedly kept interest rate unchanged despite calls for lowering it while it slashed the economic growth projection by half a per cent to 7.1 in the first policy review post demonetisation.
Announcing the fifth bi-monthly monetary policy review of the current fiscal, RBI Governor Urjit Patel also said demonetisation was not done in haste and efforts were being made to increase the supply of currency notes and appealed to the public not to hoard them.
Acknowledging that supply disruptions against the backdrop of currency replacement may drag down growth this year in India, he said short-term developments that influence the outlook disproportionately warrant caution with respect to setting the monetary policy stance.
“On balance, therefore, it is prudent to wait and watch how these factors play out and impinge upon the outlook. Accordingly, the policy repo rate has been kept on hold in this review, while retaining an accommodative policy stance,” RBI said.
Satisfied with the RBI decision to keep the repo (short term lending) rate unchanged at 6.25 per cent, decided unanimously by Patel-led 6-member Monetary Policy Committee, the Finance Ministry described it as a “bold and brilliant” move which will prevent flight of overseas capital in uncertain global environment.
