Reserve Bank of of India governor Urjit Patel today kept its key short-term lending rate, or repo rate, unchanged at 6.25 percent. The Reserve Bank’s 6-member Monetary Policy Committee unanimously decided to maintain status quo.

The Reverse repo rate, the Marginal Standing Facility, and the Bank Rate were also kept unchanged.

In its monetary policy review, the central bank also lowered its GDP growth forecast to 7.1 per cent for this fiscal, from the earlier 7.6 percent, due to short-term disruption in economic activities from demonetisation.

Headline inflation is projected at 5 per cent by the fourth quarter of 2016-17, with risks tilted to the upside, but lower than in the October policy review. The RBI said the impact of demonetisation should ebb with the progressive increase in the circulation of new currency notes and greater usage of non-cash based payment instruments in the economy.

The Reserve Bank also withdraw the 100 per cent incremental Cash Reserve Ratio from December 10. The move will allow banks to retain the deposits coming to them due to demonetisation.

Chief Economic Advisor Arvind Subramanian has termed the RBI decision to keep monetary policy rate unchanged as bold and brilliant.

Talking to reporters in New Delhi today, Mr Subramanian said, there is uncertainty, both in domestic and International market and the RBI’s decision will stablise the market.

He said, Internationally interest rates have gone up considerably after the US election and in India interest rate is coming down because of liquidity going into the Banking system.