TIL Desk/Business/Mumbai-Citing upside risks to the Reserve Bank’s inflation target for March 2017, Governor Raghuram Rajan on Tuesday maintained status quo on key rates at his last policy review meeting, as was widely expected, but underlined that the central bank continues to be accommodative.
“It is appropriate for the Reserve Bank to keep the policy repo rate unchanged at this juncture, while awaiting space for policy action. The stance of monetary policy remains accommodative and will continue to emphasize the adequate provision of liquidity,” he said in the third bi-monthly review of the monetary policy for the current fiscal.
Accordingly, the overnight repo rate at which RBI lends to the system has been retained at 6.5 per cent, while the reverse repo rate which is paid to banks has been maintained at 6 per cent. The Cash Reserve Ratio will be at 4 per cent. Rajan said risks to the March 2017 target of 5 per cent for headline inflation — which climbed to a 22-month high of 5.8 per cent in June — “continue to be on upside” on factors like food inflation, services and the effect of the seventh pay panel implementation to government employees.
