RBI monetary policy: Governor Urjit Patel keeps repo rate unchanged at 6.25%

The Reserve Bank of India (RBI) on Wednesday kept key lending or repo rate unchanged at 6.25 percent, belying expectations of a 25 basis point  cut in interest rate that several economists had anticipated. While announcing the monetary policy, the RBI also pruned the GDP growth outlook for the current financial year ending 2016-17 to 7.1 percent from the earlier estimate of 7.6 percent. [caption id=“attachment_3121922” align=“alignleft” width=“380”]  RBI Governor Urjit Patel. File photo. PTI[/caption] On the inflation front, the RBI also said it expects CPI inflation to be at 5 percent by March 2017. The decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth," the RBI policy statement says. A majority of analysts and bankers had expected RBI Governor Urjit Patel-led Monetary Policy Committee (MPC) to cut rates by 0.25 percent today, with some even hoping for a 0.50 percent reduction. Since January 2015, the RBI has slashed the repo rate six times by a cumulative 175 basis points, of which five came from former RBI governor Raghuram Rajan. Analysts were expecting the rate cut could have helped revive private investments and act as a counter to the demonetisation drive, which is slated to impact growth in the short-term.