Vigilant on inflation! RBI does not tinker with rates at fifth bi-monthly monetary policy review

RBI left policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75% and consequently, the reverse repo rate under the LAF at 5.75% and the marginal standing facility (MSF) rate and the Bank Rate untouched at 7.75%

Much in line with expectation, Reserve Bank of India (RBI) did not tinker with rates at its fifth bi-monthly monetary policy review on Tuesday. Keeping the policy a “non-event”, RBI left policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75% and consequently, the reverse repo rate under the LAF at 5.75% and the marginal standing facility (MSF) rate and the Bank Rate untouched at 7.75%.

Further throwing an element of caution to further rate cuts, India’s central bank said that it will follow developments on commodity prices, especially food and oil, even while tracking inflationary expectations and external developments and that implementation of the Pay Commission proposals, and its effect on wages and rents, will also be a factor in its future deliberations.