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RBI keeps repo rate unchanged at 6%
05
Apr '18
RBI Governor Urjit Patel addressing First Bi-Monthly Monetary Policy Press Conference 2018-2019. Courtesy: Youtube/RBI
RBI Governor Urjit Patel addressing First Bi-Monthly Monetary Policy Press Conference 2018-2019. Courtesy: Youtube/RBI
In its first bi-monthly Monetary Policy Statement, 2018-19, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent. As a result, the reverse repo rate under LAF remains at 5.75 per cent, and the MSF rate and the Bank Rate at 6.25 per cent.

The MPC has taken its decision to keep the repo rate unchanged on the basis of an assessment of the current and evolving macroeconomic situation.

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 per cent within a band of +/- 2 per cent, while supporting growth.

The MPC noted that there are several uncertainties surrounding the baseline inflation path. First, the revised formula for MSP as announced in the Union Budget 2018-19 for kharif crops may have an impact on inflation, although the exact magnitude will be known only in the coming months. Second, the staggered impact of HRA revisions by various state governments may push headline inflation up. Third, in case there is any further fiscal slippage from the Union Budget estimates for 2018-19 or the medium-term path, it could adversely impact the outlook on inflation. Fourth, should the monsoon turn deficient temporarily and/or spatially, it may have a significant bearing on food inflation. Fifth, firms polled in the Reserve Bank’s Industrial Outlook Survey expect input and output prices to rise, going forward. Sixth, recent volatility in crude prices has imparted considerable uncertainty to the near-term outlook. (RKS)

Fibre2Fashion News Desk – India


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