Mumbai, Oct 4: Rising inflationary pressure and concerns over “fiscal slippage” prompted India’s central bank, the RBI, on Wednesday to maintain its key lending rates.
According to the Reserve Bank of India’s fourth bi-monthly monetary policy review of 2017-18, the repurchase rate, or the short-term lending rate for commercial banks on loans taken from it, has been maintained at 6 per cent.
Consequent to the decision to maintain the repo rate, the reverse repo rate remained at 5.75 per cent.
“The decision of the MPC (Monetary Policy Committee) 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 per cent… while supporting growth,” the fourth bi-monthly monetary policy statement said.
The decision was taken by the six-member MPC headed by RBI Governor Urjit R. Patel. Five members of the panel voted in favour to maintain the key lending rate.
The six members of MPC are equally divided amongst government nominees and the RBI.
At its last policy review in August, the central bank had reduced its repo rate by 25 basis points (bps) to 6 per cent from 6.25 per cent.