RBI monetary policy: Repo rate kept unchanged at 6%

The Reserve Bank of India’s (RBI’s) six-member Committee (MPC), headed by Governor Urjit Patel, on Wednesday kept the – the key policy rate at which the lends money to – unchanged at six per cent, in a decision that was broadly in line with expectations.

The reduced the gross value added (GVA) growth target for the current financial year to 6.7 per cent from 7.3 per cent earlier.

In its fourth bimonthly review of the monetary policy, the RBI, however, lowered the statutory liquidity ratio – the reserve requirement that commercial need to maintain in the form of gold or government-approved securities before providing credit to customers – by 50 basis points to 19.5 per cent, with effect from October 14 fortnight. The MPC voted 5-1 in favour of the status quo on both and reverse — the latter was kept unchanged at 5.75 per cent.

In the one year since the setting up of the MPC in

October 2016, it has lowered the repo rate twice – by 25 basis points each in October 2016 and August 2017.

Most analysts had been expecting the central bank to maintain the status quo this time, but effect a rate cut later in the financial year. Some have even been saying that the rate-cut cycle, which started on January 15, 2015 with a rate reduction to 7.75 per cent from 8 per cent, might have reached its end.

Source: ET, Business Standard, Business Line

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