The Reserve Bank of India’s (RBI) monetary policy committee (MPC) kept key interest rates unchanged, but softened its hawkish policy stance after retail inflation and economic growth slowed sharply. While the repo rate—at which the central bank infuses liquidity in the banking system—has been kept unchanged at 6.25%, RBI lowered its inflation forecast for the current fiscal. The MPC has projected headline inflation at 2-3.5% in the first half of the year and 3.5-4.5% in the second half. Economists see this as an indication that the central bank may be accommodative on the future course of rates in a bid to revive economic growth. The RBI did cut the statutory liquidity ratio (SLR)—the portion of bank deposits that have to be invested in government bonds— by 50 basis points (bps) to 20%.RBI also revised its target for gross value added, another measure of economic growth, down by 10 basis points to 7.3%.

(Live Mint)