Banks

India’s central bank Wednesday kept the key repo rate unchanged at 6.25 percent, contrary to expectations.

BanksRepo rate is the short-term rate at which the central bank lends money to other banks in the country.

Consequently, the reverse repo rate has been kept steady at 5.75 percent, and the marginal standing facility rate and the bank rate at 6.75 percent by the Reserve Bank of India.

The decision was announced at the central bank’s monetary policy review meeting in Mumbai, the second such meet after demonetization of currency notes of higher denominations.

“The committee decided to change the policy stance from accommodative to neutral while keeping the policy rate on hold to assess how the transitory effects of demonetization on inflation and the output gap play out,” the Reserve Bank of India said in a statement.

The central bank also cited its concerns over inflation for its policy stance. “Excluding food and fuel, inflation has been unyielding at 4.9 percent since September,” it said.

Some Indian economists expected at least 25 basis points reduction in the repo rate, as retail inflation dropped to 3.41 percent in December, much lower than the central bank’s March-end forecast of 5 percent. Enditem

Source: Xinhua/NewsGhana.com.gh

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