This was among the few Monetary Policies where the Reserve Bank of India, did not spring a surprise and delivered as expected. Here are quick highlights of the RBI's Dec Monetary Policy.
1) Repo rates unchanged
The RBI today held repo rates steady at 6.75 per cent.
2) CRR unchanged
The cash reserve ratio has also been kept unchanged at 4 per cent.
3) Transmission worries remain
The Reserve Bank of India has said that policy rates have been reduced by 125 basis points, yet the median base lending rate has declined only by 60 bps.
4) Govt examining linking interest rates to small savings rates
The Government is examining linking small savings interest rates to market interest rates. These moves should further help transmission of policy rates into lending rates, the RBI has said
5) Inflation worries remain
While oil prices, barring geopolitical shocks, are expected to remain benign for a few quarters more, the uptick of CPI inflation excluding food and fuel for two months in succession warrants vigilance, the RBI has noted.
6) Currency markets to remain volatile
Currency markets in emerging markets have experienced selling pressures as portfolio investors continue to exit them as an asset class.
"Unease in investor sentiment is likely to increase ahead of the imminent divergence in advanced economy monetary policy stance," the central bank noted.