The Reserve Bank of India (RBI) in its annual monetary policy review kept the repo rate under the liquidity adjustment facility (LAF) unchanged at 7.5 per cent on Tuesday.
The Cash Reserve Ratio (CRR), which is the amount of deposits lenders must keep with the RBI, has also been kept unchanged at 4.0 per cent of net demand and time liability (NDTL).
The consumer inflation target is expected to be at six percent by January 2016.
RBI Governor Raghuram Rajan has also held the Repo Rate steady at 7.5 percent and the EMIs are unlikely to fall.
“Just because we haven’t moved on rates doesn’t mean we haven’t moved. We have moved on a variety of dimensions,” Rajan said.
“The timings of future cuts will depend on how much room we have, adequately buffered against US Fed Policy,” he added.
“There has to be incentive and willingness for the banks to move on rates. Banks, over time, will be forced to match the markets and bring rates down,” Rajan added.
Rajan also said that small savings rate must not obstruct the deposit rate cuts and don’t stand in way of banks.
“The US Fed policy changes will have an impact globally but that is not our central concern. US Fed policy will be one factor, but not the most important factor in terms of when we move on rates again,” he added.
RBI had lowered its repo rate by 25 basis points to 7.5 percent on March 4, after a similar cut on January 15, on the back of softening inflation and the government’s commitment to continue with the fiscal consolidation programme. (ANI)