Chief Economic Advisor Arvind Subramanian on Wednesday lauded the Reserve Bank of India (RBI) for keeping the key lending rate or the repo rate unchanged at 6.25 percent. “This is a bold and brilliant call taken at the right time,” said Subramanian. “These are times of unusual volatility and also the time to ensure that there is continuity and stability of policy in the foreign exchange market,” he added.
Subramanian also said it is due to uncertain times and domestic pressures that the RBI concluded the policy at this note. “Under liquidity pressures, the markets tend to forget that the situation is very difficult, and communication of all contradicting calls together dint seem easy,” he said emphasizing that this move would stabilize the market later.
“We will get to know the growth impact and liquidity in the system in the next two months,” he added
The Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel and six other members retained the lending rate or the repo rate unchanged at 6.25 percent. It also kept MSF and bank rate at 6.75 percent and reverse repo rate at 5.75 percent respectively.
RBI Deputy Governor R Gandhi said that almost Rs 11.85 lakh crore in the scrapped Rs 500/1000 notes have come back to the banking system after the decision of demonetisation was announced on November 8. Government had announced that the old Rs 500/1000 notes will no longer be legal tender from November 9. Public has been given time to exchange/withdraw the notes by December 30.
(With inputs from ANI)