Reserve Bank of India (RBI) Governor Raghuram Rajan today kept Repo Rate and Cash Reserve Ratio unchanged at 6.5 and 4 percent respectively. Rajan concerned over the slight rise in inflation and some domestic and global upside risks that have jumped up since April.
“Given the uncertainties, the Reserve Bank will stay on hold, but the stance of monetary policy remains accommodative. The Reserve Bank will monitor macroeconomic and financial developments for any further scope for policy actions.” RBI Governor Raghuram Rajan said in a statement. Expectations the RBI would keep rates on hold had risen after annual consumer price inflation accelerated to a stronger-than-expected 5.39 percent in April on account of higher food prices. – News18 reported.
RBI says rising crude prices and implementation of 7th pay commission pose upside risk to inflation. Commenting over lending rate cuts, Rajan said that while the Marginal Cost of Funds based Lending Rate (MCLR) has been rolled out and will be reviewed, adding the banks should cut rates as they get back to health and competition kicks in.