RBI keeps interest rate unchanged

The RBI has kept the policy rate unchanged in the new bimonthly monetary policy revision. This means that is no change in the current monetary policy stance.  To facilitate the liquidity situation, the overnight repo support and term repo support will be continued at 0.25 % and 0.75% respectively.

Expectation about a rate cut was thin though favorable conditions were prevailing in the economy. Indications from the present policy stance are that the RBI is strictly adhering to the enforcement of hard inflation targeting regime.

Justifying the decision for keeping the rate unchanged the RBI has observed that “Some easing of monetary conditions has already taken place.”

At the same time the new policy statement indicates that a rate cut is imminent in future because of disinflaion pressure. “Still weak demand and the rapid pace of recent disinflation are factors supporting monetary accommodation.