After having already cut CRR by 0.75 percentage points last week, Reserve Bank of India kept its policy rates unchanged on Thursday.
Repo or the short term lending rate of the RBI now stands at 8.5 percent. Consequently, the reverse repo rate under the LAF will remain unchanged at 7.5 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.5 percent.
The RBI also decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.75 percent.
Recent growth-inflation dynamics have prompted the Central Bank to indicate that no further tightening is required and that future actions will be towards lowering the rates. However, notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions, the RBI said in its mid-quarter review statement.
Last week, RBI slashed CRR (cash reserve ratio), the percentage of deposits that banks have to keep with the RBI, from 5.5 percent to 4.75 percent. With this, the central bank had infused Rs 48,000 crore into the economy.
This was the second reduction in the CRR since the January 24 policy announcement, when it had slashed CRR by 50 basis points releasing Rs 32,000 crore into the system.