Repo rate, which is the rate at which banks borrow from RBI to meet short term fund requirements, stands at six percent while the reverse repo stands at 5.75 percent.
Reserve Bank of India (RBI) keeps key policy repo rate unchanged at six percent for the fourth time in a row.
Repo rate, which is the rate at which banks borrow from RBI to meet short term fund requirements, stands at six percent while the reverse repo stands at 5.75 percent.
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For the first half of FY19, inflation forecast has been cut to 4.7-5.1 percent from 5.1-5.6 percent. For the second half, it has been cut to 4.4 percent, including the HRA impact from the seventh pay commission hikes, with risks tilted to the upside..
In the February policy review, RBI had raised the inflation projection to 5.1 percent in the January-March quarter from 4.3-4.7 percent in the second half of FY2018.
Retail inflation for February had cooled off to a four-month low of 4.4 percent from 5.1 percent in January and 5.2 percent in December. This is within the RBI and government's target inflation of four percent (+/- 2 percent).
“The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth,” RBI said in the policy statement.
The policy document listed several factors that are expected to accelerate the pace of economic activity in 2018-19. First, there are now clearer signs of revival in investment activity as reflected in the sustained expansion in capital goods production and still rising imports, albeit at a slower pace than in January. Second, global demand has been improving, which should encourage exports and boost fresh investment.
On the whole, GDP growth is projected to strengthen from 6.6 percent in 2017-18 to 7.4 percent in 2018-19 – in the range of 7.3-7.4 percent in H1 and 7.3-7.6 percent in H2 – with risks evenly balanced.
Governor Urjit Patel headed Monetary Policy Committee (MPC), after a two-day deliberation on April 4 and 5, announced its first bi-monthly monetary policy for this financial year 2018-19 at 2.30 pm today.
Of the six members of MPC, five members -- Chetan Ghate, Pami Dua, Ravindra H. Dholakia, Viral V. Acharya and Urjit R. Patel -- voted in favour of a pause while one member -- Michael Debabrata Patra -- voted for an increase in the policy rate of 25 basis points.
The minutes of the MPC’s meeting will be published by April 19, 2018.