Mumbai: Despite lowering its FY18 growth projections, the Reserve Bank of India (RBI) on Wednesday kept its key policy rate unchanged saying that it would wait for greater clarity on incoming data on inflation before taking any further action on interest rates.
However, the central bank slashed the banks statutory liquidity ratio (SLR), the amount of money that banks must keep in the form of liquid assets by 50 basis points to provide more liquidity to the banks. RBI has revised downwards its projection of real gross value added (GVA) growth for 2017-18 to 7.3 per cent from 7.4 per cent earlier.
“In our assessment combinations of new factors are at work. One, the transitory effects that has kept inflation at lows since November could be lingering on. Second there are supply glut condition in respect of pulses, cereals and vegetables, which may have set in before demonetisations. It is difficult to segregate these factors and gauge how they will persist and the manner in which they will impact the future path of inflation. With so many moving paths and outlook clouded with uncertainty, the monetary policy committee (MPC) decided by to stay on hold and wait for greater clarity to emerge with incoming data,” said Urjit Patel.
