RBI Bi-Monthly Monetary Policy Announced

Stock market traded low ahead RBI monetary policy. RBI made no changes in Repo rate and CRR. Repo rate remained at 6.5 percent and CRR at 4 percent remained unchanged. Repo rate is the rate at which the commercial banks borrow from the central bank. This was the second straight money policy review in which the central bank has stood pat on policy rates. It also marked the last policy review by outgoing RBI Governor Raghuram Rajan. Not only this but the CRR has also kept unchanged to 4 percent. CRR is the ratio of deposits which banks have to keep with RBI. Under CRR a certain percentage of the total bank deposits has to be kept in the current account with RBI. RBI told that inflation can cross more than 5 percent and the inflation in pulses and cereals is increasing very fast. The analysis of economic growth for the financial year 2017 has been kept at 7.6 percent. No changes has been made in this. In terms of GST (Goods and Services Tax Bill), Rajan told that through GST there will be an environment of investment all over the nation. GST rate will be very important and after GST inflation will be increased is not necessary. Looking ahead, the momentum of growth is expected to be quickened by a normal monsoon, raising agricultural growth and rural demand, RBI said. The central bank expects disbursement of payment under the 7th Pay Commission to further aid growth by giving consumer demand a push.