RBI policy review after demonetisation , Brings no respite to borrowers; keeps interest rates unchanged
MUMBAI : Reserve Bank of India (RBI) on Wednesday kept the interest rates unchanged which will bring no respite to home, auto and corporate borrowers.
The 6-member Monetary Policy Committee, headed by RBI Governor Urjit Patel, kept the repo rate or the short term rate at which central bank lends to banks unchanged at 6.25 percent and reverse repo rate at 5.75 percent.
This is RBI’s first monetary policy review after demonetisation of old Rs 500 and Rs 1,000 currency notes.RBI Governor Urjit addresses press conference soon after the announcement of monetary policy. Here are the key highlights:
7th Pay Commission disbursements have not been disruptive to inflation outcomes, 7th Pay Comm disbursements may affect inflation in next financial year. Inflation outcome in September and October vindicates current stance
Demonetisation to result in short-run disruptions in cash-intensive sectors like retail, hotels, restaurants and transportation RBI maintains ‘accommodative’ policy stance’; to withdraw incremental CRR from December 10
Note ban may bring down CPI by 10-15 bps in October-December Currency in circulation plunged by Rs 7.4 lakh crore up to December 2.
Monetary Policy highlights
All six members of the Monetary Policy Committee voted in favour of status quo. Monetary stance remains accommodative, says RBIWithdrawal of old notes could result in temporary reduction in inflation by 10-15 bps in third quarter: RBI
RBI lowers GDP growth estimate to 7.1 percent in 2016-17 from earlier projection of 7.6 percent. Retail inflation to be 5 percent in fourth quarter of current fiscal: RBI
On the domestic front, the growth of real gross value added (GVA) in Q2 of 2016-17 turned out to be lower than projected on account of a deeper than expected slowdown in industrial activity, says RBI
Global growth picked up modestly in the second half of 2016, after weakening in the first half: RBI. International financial markets strongly impacted by the result of the US presidential election: RBI
Marginal standing facility (MSF) rate and the Bank Rate at 6.75 percent. RBI keeps Repo Rate unchanged at 6.25 percent
Reverse repo rate under the LAF remains unchanged at 5.75 percent.
