As per expectations, the RBI has maintained status quo on all the policy rates in its fifth bi-monthly monetary policy released this morning. Subsequently, the policy repo rate unchanged at 8.0 per cent and the cash reserve ratio – CRR remains unchanged at 4.0 per cent. Repo rate is the rate at which RBI lends to banks generally against government securities while Cash Reserve Ratio – CRR is a certain percentage of bank deposits which banks are required to keep with RBI in the form of reserves or balances. Consequently, the reverse repo rate will remain unchanged at 7.0 per cent, and the marginal standing facility – MSF rate and the Bank Rate at 9.0 per cent.

The Bank Rate is the rate of interest charged by the RBI for providing funds or loans to the banking system. GDP growth target for the current fiscal remains unchanged at 5.5 per cent while inflation is expected to remain 6 per cent in next 12 months.

Releasing the credit policy in Mumbai today, RBI Governor Raghuram Rajan said any change in monetary policy stance at the current juncture is premature. He however, hinted at lowering policy rate early next year if current trend in fiscal developments and dis-inflationary pressure continue.

The RBI governor said that the success of ongoing government actions in removing infrastructural constraints will be key to reviving growth. He said that the government is comfortable with setting 4 per cent inflation target plus/minus 2 per cent beyond 2016. The RBI Governor has also said that the central bank is planning to announce two key relaxations soon on restructuring to tackle financial stress. The sixth bi-monthly monetary policy statement is scheduled on 3rd of February 2015.