MUMBAI: Taking the whole financial markets in India and the world over by surprise, the monetary policy committee of the Reserve Bank of India (RBI) has maintained the policy rate at 6.5 per cent.
Consequently, the reverse repo rate under the LAF remains at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
The decision of the six-member policy-setting committee headed by Governor Urjit Patel was with four in favour of status quo in the policy rate and two seeking a hike in the rate.
“The decision of the MPC is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” the RBI statement said.
To a query why MPC chose to remain unperturbed about the deep depreciation of rupee against dollar and took a stand not to increase the policy rate, the Governor Urjit Patel said the mandate of MPC is exclusively to target inflation leaving the exchange rate to the play of market, adding that RBI would certainly be keeping a close eye to monitor the excessive volatility in the market.