In a positive surprise for the markets, Reserve Bank of India (RBI), delivered the unexpected, as it left the policy repo rate and reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 7.75% and 6.75% respectively. Further, the cash reserve ratio (CRR) of scheduled banks remains unchanged at 4.0% of net demand and time liability (NDTL). Meanwhile, Marginal Standing Facility and Bank rates continues to remain at 8.75%.
However, despite maintaining a status quo, RBI underscored that it will have to act, if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall.
