The Reserve Bank of India on Wednesday kept a key lending rate unchanged but lowered growth forecast by 0.5 percentage points to 7.1% for 2016-17 amid a crippling cash crunch sparked by the government shock announcement of scrapping high-value banknotes.
All six members of the Monetary Policy Committee (MPC) voted in favour of status-quo on the repo rate, the Reserve Bank of India (RBI) said after a meeting of the panel headed by the central bank’s governor Urijit Patel. The repo rate was kept unchanged at 6.25.
Here are the nine takeaways from the credit policy:
1)Repo rate unchanged at 6.25%, reverse repo at 5.75%
2)Cash reserve ratio or CRR unchanged at 4%
3)Growth forecast cut to 7.1%, from 7.6% for 2016-17
4) Inflation target remains 5% for March 2017, but crude price volatility, surge in financial market turbulence could play spoilsport
5) Demonetisation to lower prices of perishables, could reduce inflation by 10-15 basis points by December
6) Note ban to result in short-run disruptions in cash-intensive sectors like retail, hotels, restaurants and transportation
7) All Monetary Policy Committee (MPC) members voted in favour of status quo in policy
8) Next monetary policy scheduled on February 8
9)Foreign exchange reserve at an all-time high of $364 billion on December 2