The Reserve Bank of India on Wednesday announced keeping its key policy rate or the repo rate unchanged at 6.25 percent for the second time in a row with reverse repo rate, marginal standing facility rate and the bank rate unchanged respectively.
The six members of the Monetary Policy Committee (MPC) voted in favour of holding rates amid hopes that the central bank will lower borrowing costs given the surge in bank deposits and slower pace of economic growth followed by the shocking demonetisation.
The Consumer Price Index (CPI) based inflation was under control in the month of November and December last year two key months during which the demonetization impact led to reduced consumption.
It said that the consumer prices cooled to 3.63 percent in November, and slipped further down to 3.41 percent in the following month, which is line with RBI's target of inflation at five percent by March 2017 and government's target of around four percent, with a band of two percent on either side in the next four years.
The six members of Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel met for two days on Tuesday and Wednesday before the announcement of the sixth bi-monthly and last policy for the year 2016-17 and the third by the MPC.