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The Reserve Bank of India (RBI) has left the repo rate unchanged for the fourth time in a row at 6.25%, while also keeping the reverse repo rate at 6% and the marginal standing facility rate and the bank rate at 6.50%.

RBI Governor Urjit Patel cut SLR by 50 basis points to 20%, starting June 24.

The Monetary Policy Committee (MPC) decided to maintain status quo as inflation is below forecast and economy has slowed down than expectations, according to Business Insider.

The MPC is keen to avoid ‘premature’ action at this stage and it rationalised risk weights, loan-to-value norms on home loans.

The MPC maintained neutral stance with the objective of achieving the medium target for consumer price index inflation of 4%, while supporting growth.

Within the MPC, five members were in favour of keeping the interest rate unchanged, while one did not agree. The MPC said premature action at this stage risks disruptive policy reversals later and the loss of credibility.

Also, the RBI is dealing with excess liquidity.

The consumer price inflation for April is below RBI’s forecast of 4.5% in the six months to September, and 5% for the six months through to March next year.

India Legal Bureau

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