On expected lines, RBI governor Raghuram Rajan on Tuesday kept policy rate unchanged at 6.50%. As Rajan presented his final monetary policy, the government has still to pick a successor to the highly respected former International Monetary Fund chief economist. For starters, there is the formation of the monetary policy committee (MPC) that Rajan feels can institutionalise the mechanism of setting interest rates. In the policy statement, RBI kept a positive outlook on the economy saying abundant monsoon will help in the recovery. Inflation at a two-year high prevented Rajan from cutting interest rates at his final policy review as head of the Reserve Bank of India .

Source: Hindustan Times August 09, 2016 05:18 UTC