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Reserve Bank of India keeps the key policy rates unchanged at 6.50%

The Reserve Bank of India kept the key policy rates unchanged at 6.50% in its second bi-monthly policy meet this fiscal. The central bank had cut rates by 25bps in its last policy review in April. The cash reserve ratio was also left unchanged at 4%.

The move by RBI is in line with industry and market expectations.

The RBI, in its policy statement, said, “keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5%.”

The central bank has decided to, “keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0% of net demand and time liabilities (NDTL); and continue to provide liquidity as required but progressively lower the average ex ante liquidity deficit in the system from 1% of NDTL to a position closer to neutrality.”

The central bank was expected to keep the key rates unchanged in the wake of rising inflation on the back of higher food prices. RBI will wait to see how monsoon pans out this year, for further direction.


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