RBI maintains status quo in Second Bi-monthly Monetary Policy Statement, 2016-17

The Reserve Bank of India, on the basis of an assessment of the current and evolving macroeconomic situation, has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50% in the Second Bi-monthly Monetary Policy Statement, 2016-17. It further decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liabilities (NDTL) and continue to provide liquidity as required but progressively lower the average ex ante liquidity deficit in the system from one per cent of NDTL to a position closer to neutrality. Consequently, the reverse repo rate under the LAF will remain unchanged at 6.0%, and the marginal standing facility (MSF) rate and the Bank Rate at 7.0%.

The inflation projections given in the April policy statement are retained, though with an upside bias. Considerable uncertainty surrounds these projections, which should be clarified by incoming data in the next few months, said the statement. Also, on a reassessment of balance of risks, the GVA growth projection for 2016-17 has also been retained at 7.6 per cent with risks evenly balanced.

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