No knee-jerk reaction from Markets to RBI’s monetary policy status quo

The Reserve Bank of India kept its major rates unchanged in its monetary policy statement on Tuesday as it remained cautious in the face of an uncertain monsoon ahead. The markets, which slipped in early deals as traders had turned cautious before the policy statement, which pointed to a gradual recovery in India's economy.

The central bank said it had decided to:

· keep the policy repo rate unchanged at 7.25 per cent;
· keep the cash reserve ratio (CRR) unchanged at 4.0 per cent.

The policy statement from Mint Street said the outlook for growth was improving gradually as a drop in crude oil prices and falling food inflation helps the economy.

It said there were signs of consumption picking up in the economy.

The RBI added the credit availability in most sectors was adequate.

The RBI said economic recovery in India was work-in-progress.

Nifty gained 9 points to 8,552
Sensex rose 13 points to 28,200

Major Indices recovered from intra-day lows after the Reserve Bank Governor held key policy rates in its monetary policy statement.

Image credit: Indiatimes