Reserve Bank of India (RBI) on Wednesday kept the key interest rate retained, on the expected lines, at 6 basis points, and the reverse repo at 5.75 percent in its fifth bi-monthly monetary policy review of 2017-2018 by the MPC(Monetary Policy Committee) headed by RBI Governor Urjit Patel, but raised the inflation forecast for remainder of the current financial year to 4.3-4.7 percent.
It said the reason for the decision was “achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent while supporting growth”.
The central bank kept the economic growth forecast unchanged at 6.7 percent for the fiscal ending March 31. The cash reserve ratio (CRR) too has been left unchanged at 4%.
The uptick in the GDP (Gross Domestic Product) numbers for the September quarter – after seeing a continuous decline for five quarters – eased pressure on the RBI to lower the monetary policy rates. The banking sector stocks entered a negative territory ahead of the RBI’s monetary policy decision as the stock market opened on Wednesday. BSE banks constituting 10 key banking stocks traded at 114 points or 0.40 percent lower at 28,345 level.