Raghuram Rajan holds ground, keeps key interest rates unchanged

Mumbai: At the central banks policy review on Tuesday, December 2, 2014, Governor Raghuram Rajan announced that the repo rate would remain unchanged at 8 per cent, CRR unchanged at 4 per cent and that there would be no cut in the interest rates.

The CRR (Current Repo Rate) is the key lending rate at which banks borrow from the Central Bank. The lower repo brings down the bank’s borrowing costs, prompting them to lower loan rates. 

Read: The gospel of inflation, according to RBI Governor Raghuram Rajan

Rajan has kept all the policy rates unchanged, despite pressure from the Central Government to lower them in the wake of easing inflation. Rajan said that the inflation target will be 4 per cent, plus or minus 2 per cent. 

RBI Governor Raghuram Rajan has finally announced that there will be no changes in the interest rates for now. This brings no relief for the home loan borrowers.

The GDP growth is seen at 5.5 per cent in 2015-16. However, the Governor has said that he foresees the change of rates in early 2015.

RBI hints at lowering policy rate early next year if current trend in fiscal developments and inflationary pressure continues.