RBI keeps Repo Rate Unchanged at 7.25%; CRR Unchanged
Aug 04, 2015: Raghuram Rajan, the RBI Governor, didn’t change the repo rate as expected. Rajan kept the repo rate unchanged at 7.25 per cent. The Cash Reserve Ratio (CRR) and Statuary Liquidity Ratio (SLR) were also kept same at 4 per cent and 21.5 per cent respectively. This decision was taken in the monetary policy meeting.
The primary factor behind this decision is inflation. Inflation has reached at the highest point in the eighth month of 2015; after a sharp increase in the food prices. Another factor is the monsoon rain that gives life to the 60% of the farmlands of the country.
Policy rates are reduced by 75 basis points since January 2015 as per the guidelines of The Reserve Bank of India (RBI). RBI has cut the repo rate thrice in this year, but the commercial banks didn’t cut the rates as per the expectations of RBI.