RBI keeps key rates unchanged, predicts inflation of 5% in 2016-17
The central bank also said it expects GDP growth of more than 7% over the next two years, but reiterated doing business should be made easier, especially for start-ups.
The Reserve Bank of India on Tuesday kept the key interest rates unchanged, leaving the repo rate at 6.75%, reverse repo rate at 5.75% and the cash reserve ratio at 4%. RBI governor Raghuram Rajan announced the decision at the banks sixth bi-monthly monetary policy review this year. Rajan reiterated that the country needs to take steps to make doing business easier, especially for the growing start-up industry, Hindustan Times reported.
The bank predicted that inflation would be at around 5% in 2016-17 if the monsoon is an average one, though the figure did not take into consideration the impact of the seventh pay commission, which is expected to be executed soon. It forecast GDP growth of 7.4% in 2016 and 7.6% in 2017.
The repo rate is the rate at which the RBI lends money to commercial banks if there is a shortage of funds.
