In its fourth bimonthly review of the monetary policy, the RBI, however, lowered the statutory liquidity ratio – the reserve requirement that commercial banks
need to maintain in the form of gold or government-approved securities before providing credit to customers – by 50 basis points to 19.5 per cent, with effect from October 14 fortnight. The MPC voted 5-1 in favour of the status quo on both repo rate and reverse repo rate -- the latter was kept unchanged at 5.75 per cent.
In the one year since the setting up of the MPC in October 2016, it has lowered the repo rate twice – by 25 basis points each in October 2016 and August 2017.
Most analysts had been expecting the central bank to maintain the status quo this time, but effect a rate cut later in the financial year. Some have even been saying that the rate-cut cycle, which started on January 15, 2015 with a rate reduction to 7.75 per cent from 8 per cent, might have reached its end.