Status quo on rates surprises positively - Angel Broking

The Reserve Bank of India (RBI) maintained status quo on policy rates in its Mid-Quarter Monetary Policy Review belying our and the market expectations of an increase in the repo rate by 25bp.

The repo rate continues to remain unchanged at 7.75% with the reverse repo at 6.75%.

The Marginal Standing Facility (MSF) too stands unchanged at 8.75% and the Cash Reserve Ratio (CRR) at 4.0% of banking system's net demand and time liability (NDTL).

Despite elevated inflation, the major rationale for the Reserve Bank of India (RBI) to hold rates in the policy review is the easing in vegetable prices, which is expected to provide some respite to headline inflation.

Nonetheless, the policy stance continues to take a cautious approach towards inflation and unless the softening materializes, RBI has indicated at a possibility of policy tightening going ahead.

Source : Equity Bulls

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