Reserve Bank of India kept interest rates on hold at 7.50%, choosing to wait longer to assess inflationary pressures before making its next move and to give banks more time to adjust lending rates to reflect previous rate cuts. The RBI said in a statement that it would maintain an "accommodative stance". Higher US interest rates are expected to lead to capital outflows from some emerging market economies; Indian rupee has remained firm against other currencies. "At this point... we feel we are adequately buffered. That is not going to be the key factor in determining our monetary policy stance going forward," Rajan said.
The Main highlights are as below
1. RBI keeps repo rate steady at 7.75%.
2. Reiterated its target of 6% CPI by January 2016
3. Sets a new target of 4% by the end of 2017/18, the midpoint of the CPI range
4. RBI to allow Indian corporate to raise external commercial borrowings through rupee debt overseas
"A predictable policy with no surprise as such. Even if it has maintained status quo on monetary measures, it has announced a few growth-supportive structural measures to facilitate long-term funding by banks to infrastructure to improve policy transmission. The RBI's year-end inflation forecast supports our earlier prediction that one more rate cut of 25 basis points is in the offing around June 2015," said Rupa Rege Nitsure, group chief economist, L&T financial, Mumbai.