RBI announcement will enhance investor's confidence on Indian macro-economic indicators: Chanda Kochhar

"The MPC has not viewed the recent growth slowdown as being structural in nature and is expecting it to be transient with growth prospects likely to improve over the medium term. The MPC has also reiterated the need to support investment activity and the gamut of measures that are being undertaken by government will help this process significantly. By retaining the focus on inflation targets, this policy ensures that the confidence of the investors on the Indian macro-economic indicators will continue," Kochhar said. 

"Further policy action will be contingent on the evolution of the output gap and its impact on the inflation trajectory," he said.

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at six per cent.

Consequently, the reverse repo rate under the LAF remains at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.

The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, the RBI release said.

There has been a huge fall in growth projections, from 7.3 per cent in August to 6.7 per cent now, media reported.

RBI governor Urjit Patel said that loss of growth is a concern and inflation is expected to rise from 4.2 per cent to 4.6 per cent.