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RBI: Repo rate unchanged
April 10, 2017
The Reserve Bank of India under Urjit Patel did not surprise the investors. This is the first time since October that the policy rate is kept unchanged, but inflationary pressures are said to be taken care of. However, the Monetary Policy Committee raised the reverse repo rate, at which the Reserve Bank of India pays for excess deposits. This quarter payment by RBI was intended at lowering the distortion of money market rates. Banks are facing a lack of funds after demonetization (since November 8), which in turn has caused surge in liquidity and hence distorted money market rates.
