Mumbai: RBI Governor Raghuram Rajan surprised the markets on Wednesday by leaving all key policy rates unchanged, notwithstanding persistent high inflationary pressure.
The short-term lending rate was kept unchanged at 7.75 percent, while the cash reserve ratio (CRR) remained at 4 percent, the Reserve Bank of India said in its Mid-Quarter Monetary Policy Review.
Following are the highlights of RBI's mid-quarter review of monetary policy:
* RBI keeps key policy rate, cash reserve ratio unchanged.
* Repo rate unchanged at 7.75 percent; cash reserve ratio unchanged at 4 percent.
* RBI to wait for more data before taking policy action.
* Outlook on global growth continues to remain moderate.
* Volatility in the financial markets could pick up following the inevitable taper of the quantitative easing in the US.
* Lacklustre indicators on services and subdued domestic consumption point at continuing headwinds to growth * Expenditure cuts by Govt will only add to the pressures on the growth front.
* Revival of stalled investments crucial for growth.
* High inflation numbers risks entrenching inflation expectations at unacceptably elevated levels.
* High and persistent inflation also increases the risks of exchange rate instability.
* RBI expects inflation to be contained on vegetable prices going down sharply.
* Current inflation is high but its trajectory is uncertain and there is merit waiting for more data.
* RBI to be vigilant and will act between scheduled policies if expected softening in food prices does not materialise.
First Published: Wednesday, December 18, 2013, 11:56