RBI offers no relief to borrowers, keeps repo rate unchanged at 6%.
Wednesday, October 4, 2017 IST
New Delhi: Rebuffing pressure from the government to reduce cost of borrowing, the Reserve Bank on Wednesday kept interest rates unchanged at its fourth bi-monthly monetary policy review for FY 2017-18 amid lingering concerns over inflation.
The government has been pressing for a cut in interest rates to spur growth which fell to 3-year low of 5.7 percent in the June quarter.
Headed by RBI Governor Urjit Patel, Monetary Policy Committee (MPC) today left the repo rate - the rate at which the central bank infuses liquidity in the banking system (or lends to banks) - unchanged at 6 percent.
"The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth," RBI said in its fourth bi-monthly monetary policy review for 2017-18.
Retail inflation rose to five-month high of 3.36 percent in August due to costlier vegetables and fruits. The consumer price index (CPI) based inflation was 2.36 percent in July.
In its last policy review in August, the RBI reduced the repo rate by 0.25 percent to 6 percent, citing reduction in inflation risks. The rate cut was the first in 10 months and brought policy rates to a near 7-year low.
The reduction in August came after four consecutive policy reviews in which the RBI had maintained status quo on its repo, or short-term lending rate, since the reduction by 0.25 percent to 6.25 percent in October 2016.
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