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28 Jan 2014
RBI raises repo rates unexpectedly
FXstreet.com (Barcelona) - The RBI has unexpectedly raised its repo rate to 8.0% from 7.75%, with the reverse repo rate rising to 7.0%, while the cash reserve ratio stays unchanged. The USD/INR trades around 63.10 post announcement as overall it was a dovish statement.
According to the RBI, the monetary reviews will now be every 2 months, saying that "further near-term interest rate hikes unlikely if inflation meets RBI projections." With regards to inflation, the RBI said "it is expected above 9% in Q1 2014 and between 7.5-8.5% in Q1 2015." As per growth projections, "GDP growth may fall short of 5% in current fiscal year but likely to be between 5-6% in 2014/2015." The action taken by the RBI, in view of the Governor, "will securely set economy on disinflationary path."
According to the RBI, the monetary reviews will now be every 2 months, saying that "further near-term interest rate hikes unlikely if inflation meets RBI projections." With regards to inflation, the RBI said "it is expected above 9% in Q1 2014 and between 7.5-8.5% in Q1 2015." As per growth projections, "GDP growth may fall short of 5% in current fiscal year but likely to be between 5-6% in 2014/2015." The action taken by the RBI, in view of the Governor, "will securely set economy on disinflationary path."