Reserve Bank of India keeps rates unchanged at 7.25 percent update for 04 August 2015

 India's central bank has kept the policy repo rate unchanged at 7.25 per cent in the third bi-monthly monetary policy statement. "On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25 per cent," as per RBI statement. Relative to the projections of the second bi-monthly statement, inflation projections in this bi-monthly statement are elevated by the higher than expected June observation but reduced by prospects of softer crude prices and a near-normal monsoon thus far, according to the statement. This implies that inflation projections for January-March 2016 are lower by about 0.2 per cent, with risks broadly balanced around the target of 6.0 per cent for January 2016. "Taking into account all this, and given that policy action was front-loaded in June, it is prudent to keep the policy rate unchanged at the  current juncture while maintaining the accommodative stance of monetary policy," RBI said. RBI has also decided to: 1. keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL); 2. continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and 3. continue with daily variable rate repos and reverse repos to smooth liquidity. Consequently, the reverse repo rate under the LAF will remain unchanged at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.25 per cent.
Reserve Bank of India keeps rates unchanged at 7.25 percent update for 04 August 2015 Reserve Bank of India  keeps rates unchanged at 7.25 percent update for 04 August 2015 Reviewed by Money99 on 18:03:00 Rating: 5

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