"The RBI decision to keep rates on hold was more in consonance with market expectations but the policy guidance was a pleasant and pragmatic surprise. The significant downward revision in inflation projections and assurance of continued durable liquidity was most reassuring to market participants in terms of a stable and predictable interest rate structure," he said in a statement.
RBI, in view of the current and evolving macroeconomic situation in the country, on Wednesday decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent. The decision was taken at the fifth bi-monthly meeting of the Monetary Policy Committee (MPC) of RBI.
"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent," said the RBI in a press statement after the meeting.
The repo rate is the rate at which the Central bank of India lends money to commercial banks in the event of any shortfall of funds, and which also used by the monetary authorities to control inflation.
SBI Chairman further said, "On the development front, permitting non-residents to hedge their rupee interest risk is a welcome move providing the much-needed fillip to the Rupee Interest Rate Derivative market. Allowing non-residents to participate in the overnight indexed swap (OIS) market for the non-hedging purpose will also add depth to the market in terms of broad-based participation."
"The liquidity coverage ratio (LCR) alignment to Basel III was already known but now the RBI has provided a clear and time-bound glide path for transition to the new regime," added SBI Chairman Kumar.
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