Taking markets by surprise, RBI Governor Urjit Patel today kept short term lending rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation.
Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously.
In view of disruption in economic activities due to demonetisation, RBI lowered growth forecast from 7.6 per cent to 7.1 per cent for the current fiscal.
The federal bank also said that there was adequate supply of new notes adding that people not to hoard new currency. It said that the RBI had supplied Rs 4 lakh crore in new notes.
The bank said that almost Rs 11.55 lakh crore of old notes were back in the system.
This admission came just days after the junior finance minister in Parliament had informed that almost all demonetised currency will be back in banks, causing setback to Prime Minister Narendra Modi’s much-touted claims to curb black money to justify his decision to ban notes.