RBI monetary policy review highlights: Raghuram Rajan keeps repo rate unchanged at 6.5%, CRR at 4%

During RBI's monetary policy review today, Raghuram Rajan said deposit growth has been strong during April and May, which will ultimately lead to lowering of lending rates by banks.

Written by FE News Desk

Updated: June 7, 2016 13:13 IST

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Rajan, who took charge as RBI Governor on September 4, 2013, had gradually raised the short-term lending rate from 7.25 per cent to 8 per cent. (Reuters)

Reserve Bank of India Governor Raghuram Rajan on Tuesday maintained status quo on key rates and kept repo rates unchanged at 6.5 per cent in its bank’s bi-monthly monetary policy review.

He cited higher upside risks to’inflation trajectory’ for keeping the rates unchanged, but said the central bank will remain accommodative provided data are supportive.

ALSO READ: 3 reasons why Raghuram Rajan did not cut key rates in today’s RBI policy review

Below are the highlights from RBI’s monetary policy review and Raghuram Rajan’s press conference on June 7, 2016

-Brexit can be a source of volatility for financial markets. We should be able to weather this volatility if it emerges, says Raghuram Rajan
-Deposit growth strong during April and May since MCLR regime has come into operation. This will ultimately lead to lowering on lending rates, but banks have to be given more time, says Raghuram Rajan
-Not in favour of banks holding majority stake in stressed assets funds proposed by government. RBI has provided its views to the government.
-RBI urges banks to improve provisioning coverage ratio based on financials
-Oil prices at current level not to affect remittances. Oil prices not of concern at $50 per barrel level, says Urijit Patel
– Inflation in a band, but need to move to greater comfort level, says Rajan
-We are looking for rooms to ease rates not move to tightening regime, says Rajan
-RBI not to bail out people out of their responsibility in forex market
-Timely capital infusion in PSU banks to aid credit flow
-We have enough dollars to supply if need be, says Rajan
– We have no desire to move the rupee in any direction, says Raghuram Rajan
– Will be cruel of me to spoil the fun press has been having over my tenure, says Raghuram Rajan. He added tenure issue will be known at an appropriate time after discussion between the govt and the current incumbent
-RBI to monitor rupee and dollar liquidity and act accordingly. Will provide rupee liquidity as market requirement, says Raghuram Rajan
-RBI says rising crude prices and implementation of 7th pay commission pose upside risk to inflation
– RBI to soon review implementation of marginal cost lending rate framework by banks
– Early days for transmission of interest rates and MCLR regime
-Domestic conditions for growth are improving gradually, mainly driven by consumption demand,
-Public investment stronger, private investment weakness worrisome, says Raghuram Rajan
-Keeps key rates on hold, but to continue with accommodative stance going forward
-January 17 CPI inflation target unchanged at 5 per cent
-FY17 GDP growth target unchanged at 7.6 per cent
– Good monsoon can soften inflation
– Inflation upside risk in FY17
– Repo rate unchanged at 6.50 per cent, Reverse Repo at 6%, Cash reserve ratio or CRR unchanged at 4%
-Sensex jumped 116.88 points up at 26,894.33, while NSE Nifty surged 23.25 points to 8,224.30 after RBI kept key rates unchanged