The Reserve Bank of India has kept its Policy Repo Rate and cash reserve ratio [CRR] unchanged at 7.75 percent and 4.0 percent respectively. Citing the currently and evolving macro-economics situation, RBI took this decision, however, the statutory liquidity ratio [SLR] was dropped by 0.5 percent from 22 to 21.5.
Speaking at the Monetary Policy Review meeting, RBI Governor Raghuram Rajan said, the inflation is likely to be around the target of 6 by January 2016, however this depends upon the rainfall and oil prices. The current account deficit is project at 1.3 percent of GDP this fiscal year and could be even more lower. Soon after the announcement was made, the stock markets ended loss making and bank stocks were hit majorly.
However, the analysts predict that RBI could cut down the repo rate further, if the NDA government budget convinces too. The full-fledged Union Budget 2015 will be presented in Lok Sabha in the month of February when Parliament will be meeting for the budget sessions. Right from banking to export sector, all eyes are the Union budget.
On January 15, the Central bank has surprised everyone by reducing the repo rate by 0.25 per cent and since then stock markets were trading positively.