New Delhi, Apr 6: Today the Reserve Bank of India in its first bi-monthly monetary policy review of 2017-18 kept its lending rate unchanged at 6.25 per cent. It stated that to change it requires further macroeconomic data. But the RBI narrowed the LAF (liquidity adjustment facility) policy corridor and hiked the reverse repo rate to six per cent and the marginal standing facility (MSF) rate and the Bank Rate are at 6.50 per cent. The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. Inflation developments have to be closely and continuously monitored, with food price pressures kept in check so that inflation expectations can be re-anchored. At the same time, the output gap is gradually closing. Consequently, aggregate demand pressures could build up, with implications for the inflation trajectory. At its last policy review in February, while holding rates at 6.25 per cent, the central bank had changed its policy stance from “accommodative” to “neutral”.
