Policy rate News

Markets took a breather after four back to back record-setting sessions as the benchmark Sensex today hit an all-time high of 32,110 but ended with a paltry loss.

With banks flush with funds post demonetisation and surging oil prices likely to fuel inflation, the Reserve Bank may refrain from lowering benchmark interest rate at its policy review meet this week.

Reacting to US Federal Reserve rate hike on Wednesday, Sensex and Nifty opened on highly lower note on Thursday.

Reserve Bank Governor Raghuram Rajan kept the policy rate unchanged earlier this month, despite a majority of seven external advisors to the RBI board favouring a cut of up to 0.5 percent, the central bank said Wednesday.

With the second surprise 25 bps repo rate cut by the Reserve Bank on March 4, the policy rates have reached neutral and the average policy rate over the next three years should be around 7.4 per cent, says a report.

Rajan, who has kept the key policy rate at 8 percent since January, said India has not fully solved the supply side problems and hence people will get more inflation over time.