RBI's monetary policy: Here are 6 key takeaways

The Reserve Bank of India (RBI) kept the key repo rates unchanged at 6.25% on Wednesday in its sixth monetary policy review. Repo rate is the rate at which the central banks lend to other banks.

The RBI said, "The decision of the Monetary Policy Committee (MPC) is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth."

Here are six key takeaways from the monetary policy:

1) Key repo rates left unchanged at 6.25% and the reverse repo rate left unchanged at 5.75%.

"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to: • keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent."

2) In the aftermath of the government's demonetization move, the GDP estimate for FY17 has been lowered to 6.9%. However, the central bank expects it to rebound to 7.4% next fiscal.

3) The RBI pegged January - March retail inflation to below 5%. 

4) The policy stance was shifted from "accommodative" to "neutral" keeping in mind the transitory effect of demonetization on inflation. 

5) The central bank set up a committee on cyber security to suggest steps for checking online frauds. 

6) Cash withdrawal limits from savings accounts would be raised to Rs 50,000 from February 20, and will be done away with completely from March 13.