RBI surprises everyone, keeps repo rate unchanged at 7.75 per cent

Reserve Bank of India (RBI) surprised everyone by keeping rates unchanged on Wednesday in the mid-quarter review of the monetary policy despite high inflation levels citing the prospect of easing retail prices and its concerns about the weak domestic economy.

Highlights of RBI policy review
-RBI keeps key policy rate, cash reserve ratio unchanged
-Repo rate unchanged at 7.75 pc; cash reserve ratio unchanged at 4 pc
-RBI to wait for more data before taking policy action
-Outlook on global growth continues to remain moderate
-Volatility in the financial markets could pick up following the inevitable taper of the quantitative easing in the US
-Lacklustre indicators on services and subdued domestic consumption point at continuing headwinds to growth
-Expenditure cuts by Govt will only add to the pressures on the growth front
-Revival of stalled investments crucial for growth
-High inflation numbers risks entrenching inflation expectations at unacceptably elevated levels
-High and persistent inflation also increases the risks of exchange rate instability.
-RBI expects inflation to be contained on vegetable prices going down sharply
-Current inflation is high but its trajectory is uncertain and there is merit waiting for more data.
-RBI to be vigilant and will act between scheduled policies if expected softening in food prices does not materialise.