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RBI keeps rates unchanged, maintains accommodative monetary policy stance(thehindu)

Lowers the Gross Value Added growth projection for 2016-17 to 7.1 per cent from 7.6 per cent.

The Reserve Bank of India on Thursday kept the base rate unchanged at 6.25 per cent. This was announced at its bi-monthly monetary policy review.
This, being the first monetary policy review after the demonetisation of old Rs.500 and Rs. 1,000 notes, there were wide expectations of a rate cut as banks saw a surge in deposits.
But the central bank said all Monetary Policy Committee (MPC) members voted in favour of keeping the interest rate unchanged.
"The decision of the MPC is consistent with the accomodative stance of the policy in consonance with the objective of achieving 5% CPI inflation by Q4 of FY17," the RBI said.
The RBI has lowered the Gross Value Added (GVA) growth projection for 2016-17 to 7.1 per cent from 7.6 per cent. It said it was withdrawing incremental Cash Reserve Ratio (CRR) with effect from December 10.
On demonetisation
Deputy Governor R. Gandhi defended the demonetisation programme, saying the currency ban decision was not taken in haste.
Mr. Gandhi said the RBI had infused Rs. 4 lakh crore since the note ban and 19.1 billion pieces of currency were put back into circulation. "This is more than the total of last three years."
The RBI has said Rs. 11.55 lakh crore of banned notes have come back in to the system.
RBI Governor Urjit Patel assured that the ban of legal tender status has no implications on RBI balancesheet.
Mr. Patel ruled out any fundamental trust deficit from the public.  "Most people think it's a good decision as it fights fake currency, black money and terrorism," 


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