The Reserve Bank of India kept key interest rate unchanged in the third monetary policy review. The RBI status quo was widely anticipated by the market participants. Repo and reverse rates stood at 7.25% and 6.25% respectively. At the same time, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) retained at 4% and 21.5% respectively.
Commenting on the policy announcement, Arundhati Bhattacharya, Chairman, SBI said, ''RBI decision to hold rates was as per market expectations. The good thing is however that the RBI forward guidance clearly spells out the possibility of more monetary accommodation. In our view, though such action will be data dependent, there seems to be a bias towards further rate cuts. The lowering of inflation projection by RBI in the last quarter is an acknowledgement of a benign inflation trajectory.''
''With international commodity prices continuing to decline, it will provide a further cushion on the external front. This will mitigate any adverse external shocks from fed rate hike. The decision to hold repo rate was as per market consensus. With monsoon projections better than anticipated and declining commodity prices there are indeed rooms for more monetary accommodation, as RBI suggests,'' Bhattacharya added.
