RBI rates unchanged in 6th bi-monthly monetary policy review

The Reserve Bank of India (RBI) in its sixth bi-monthly monetary policy review for year 2016 has maintained status quo in key policy interest rate.
The key policy interest rates were kept unchanged on the basis of an assessment of the current and evolving macroeconomic situation in the country. RBI has kept its stance on the credit policy accommodative.
Key policy rates are

  • Repo rate under the liquidity adjustment facility (LAF): unchanged at 6.75 per cent.
  • Reverse repo rate under the LAF: unchanged at 5.75 per cent.
  • Marginal standing facility (MSF) rate and the Bank Rate has unchanged at 7.75 per cent.
  • Cash Reserve Ratio (CRR) of scheduled banks: Unchanged at 4.0 per cent of net demand and time liability (NDTL).
  • Continuation of liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate.
  • Continuation of liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions.

RBI projections

  • In Financial Year (FY) 2016 growth will be at 7.4% with downward bias and FY17 growth at 7.6 % despite headwinds.
  • Inflation will be around 5% for FY 16-17 due to good monsoon projections that can pull the inflation down. The inflation rate has evolved closely along the trajectory set by the monetary policy stance of RBI.



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