RBI keeps repo rate unchanged at 6.25% for first half of 2017-18
Posted on:06 Apr 2017 16:16:48
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06 April 2017 Current Affairs: The monetary policy committee (MPC) headed by RBI governor Urjit Patel left the policy lending rate unchanged at 6.25%.
But RBI hiked the borrowing rate or reverse repo to 6% from 5.25% to suck out extra cash. Simply put, this means that RBI will pay a higher interest to banks for parking money with the central bank. For retail customers, this would not have any impact on their borrowings from banks. But it would mean banks would park a larger amount of money with RBI than use it for lending.
The cash reserve ratio, the amount of deposits banks have to keep in cash, stays at 4%.
India’s economic growth is estimated to have slowed to 7.1% in 2016-17 from 7.9% in 2015-16. However, most analysts expect growth to bounce back in 2017-18.
The government’s Economic Survey in February forecast GDP growth to accelerate to 6.75-7.5% in 2017-18.
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