Repo rate to remain unchanged, says Raghuram Rajan in his last monetary policy

Lucknow: Reserve Bank of India governor made no change in the interest rates in view of the volatility in retail prices. The repo rate will also remained unchanged at 6.5 per cent.

Announcing on Tuesday the bi-monthly monetary policy, which may be his last, Governor Raghuram Rajan said, “It is appropriate for the Reserve Bank to keep the policy repo rate unchanged at this juncture, while awaiting space for policy action”.

He was guided by the fact that the retail inflation has been hovering around six per cent. This can attributed to volatility in food prices and the impact of the 7th Pay commission for government employees.

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The situation may change in months to come because of good monsoon and better sowing, he said in a statement.

The next monetary policy will be decided by a committee which has been already formed. There are six members in the committee including one from the RBI who has been already named.

Rajan who has taken over three years ago is due to retire in the first week of next month.

All these years he had fought hard to contain inflation. For him growth was important but rising prices could not be ignored. This had not found favour with many politicians and economists including BJP MP Subramanian Swamy who had launched a campaign against him.

He ended his campaign only after the Prime Minister reprimanded him. Whatever happens next month, Rajan will be remembered for a few things--- bringing down inflation from ten to nearly six per cent, stabilizing rupee and raising foreign reserve to a high level.

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