Taking everyone by surprise, Reserve Bank of India’s Governor Urjit Patel kept the repo rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation. The RBI’s more cautious approach also comes amidst a volatile global environment, which saw the rupee sink to a record low last month as part of a sell-off in emerging market assets. Few highlights of RBI’s fifth bi-monthly monetary policy statement of the finacial year 2016-17: Repo rate unchanged at 6.25%, Reverse Repo at 5.75%; Cash reserve ratio or CRR unchanged at 4%; Cuts growth forecast to 7.1%, from 7.6% for this fiscal; Inflation target remains 5% for March 2017, upside risk; Foreign exchange reserve rose to all-time high of $364 billion on December 2; RBI injected Rs.1.1 lakh crore liquidity through OMO purchases this fiscal.

(Financial Express)