Monetary policy review: RBI keeps repo rate unchanged at 6.5%

Cornelia Mascio
Dicembre 5, 2018

Not only did the 6-member committee decide to keep the repo rate (the rate at which RBI lends money to banks) unchanged, but also kept its "calibrated tightening" stance in tact.

While the decision on keeping the policy rate unchanged was unanimous, Ravindra H Dholakia voted to change the stance to neutral. One basis point is one-hundredth of one percentage point, i.e. 0.01 percent.

GDP growth for 2018-19 has been projected at 7.4 per cent (7.2-7.3 per cent in second half) as in the October policy, and for first half of 2019-20 at 7.5 per cent, with risks somewhat to the downside, it further said.

SLR is the reserve requirement that the commercial banks in India are required to maintain in the form of cash, gold reserves, government-approved securities before providing credit to the customers.

The RBI, however, lowered inflation forecast sharply for the second half (six months) of 2018-19 to 2.7 per cent-3.2 per cent.

The central bank also retained the GDP growth projection for FY19 at 7.4 per cent.

Weaker global oil prices and domestic food prices are expected to drag the headline inflation rate below projections.

The CBRT said in a statement that its Monetary Policy Committee will meet eight times a year in line with the schedule announced earlier in the year.

Over the past five years, annual inflation saw its lowest level in April 2013, with 6.13 percent, and its highest level this October.

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