MPC in its fourth bi-monthly meeting of FY18, decided to keep the policy repo rate unchanged at 6.00%, consequently the reverse repo rate remains at 5.75%, MSF and Bank rate at 6.25%. Monetary policy stance remains neutral in consonance with the objective of achieving the medium-term target for CPI inflation of 4% +/- 2%, while supporting growth.
We had opined in our 3rd August note that RBI is expected to remain on hold in the near term. As expected, RBI has increased its inflation expectation from 3.5-4.5% to 4.2-4.6% in H2FY18, raising the lower end by 70 bps. On plus side, headline CPI is expected at 4.5% in Mar-19, down 10 bps from 4.6% in Mar-18.
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