Reserve Bank Governor Raghuram Rajan on Tuesday kept the repo rate unchanged at 6.50 per cent. Stating that there are 28 days left in his term as RBI governor, he said, "I intend to use them fully."

This is Rajan's last monetary policy review as he will leave on September 4 after a three-year term. This is also the last bi-monthly monetary policy to be decided by the central bank Governor as the broad-based 6-member panel may take over the job before the next review on October 4.

Highlights...

-- Several developments have clouded the outlook for the global economy.

-- Risks to the inflation target of 5 per cent for March 2017 continue to be on the upside.

-- The passage of the GST Bill augurs well for the growing political consensus for economic reforms. 

-- Despite easy liquidity, some banks have only partially passed the past RBI rate cuts.

-- RBI does not give money directly to citizens despite the central bank printing money. He said this partly in jest, but primarily warning the public not to respond to emails saying the RBI governor is handing out money. 
The government announced last week that it would like the RBI to focus on maintaining retail inflation rate of 4 per cent for the next five years, based on which the new interest rate setting panel would take its monetary policy decisions going forward.

The move, which provides for a margin of plus or minus 2 per cent in this target thus fixing the upper tolerance level at 6 per cent till 2021, is being seen as government putting the seal on Rajan's inflation-first model of monetary policy.