RBI's move to keep repo rate unchanged on expected lines, says BS Jury

On the developmental and regulatory policies front, the RBI has announced a number of measures: SBI

Arundhati Bhattacharya

Chairman, State Bank of India

The Reserve Bank of India’s (RBI’s) decision to keep the repo rate on hold was on expected lines, even though the reverse repo rate was raised to six per cent, thereby narrowing the repo-reverse repo corridor to 25 basis points. Though this narrowing of the rate corridor may be viewed as rate stability, in an environment of surplus liquidity, it may effectively create downward rigidity for the lower part of the corridor. This is likely to push up the term structure of interest rates and may not allow the full benefits of abundant