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RBI keeps key interest rates unchanged

Contrary to market expectations, the Reserve Bank on Monday kept policy rates unchanged in view of rising inflation and global economic uncertainty, pulling down stocks markets sharply.

Besides, the central bank also kept cash reserve ratio (CRR) or the percentage of deposits that banks have to keep with RBI unchanged at 4.75 per cent.

RBI, in its mid-quarterly review of the monetary policy said future action would depend upon on external factors, domestic developments and inflationary risks.

“Future actions will depend on a continuing assessment of external and domestic developments that contribute to lowering inflation risks,” RBI said.

Stock markets fell sharply after having opened high in the morning on rate cut hopes. However, after the RBI policy announcement, the BSE 30-scrip index, Sensex, fell by over 200 points to below 17,000-mark it had crossed in the morning trade.

Experts were expecting the Reserve Bank to cut the lending rate (repo) by at least 0.25 per cent and were also looking forward to further cut in CRR to infuse more liquidity in the financial system.

While the short term lending rate has been kept unchanged at 8 per cent, CRR remains at 4.75 per cent.

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