RBI Monetary Policy LIVE Updates: MPC keeps Repo rate unchanged
The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth
In December, the Reserve Bank of India’s monetary policy committee surprised the markets by leaving rates unchanged when economists had forecast a cut. Much has changed since and this time around the expectation is that the MPC will hold tight while leaving its accommodative stance unchanged.
The Reserve Bank of India (RBI) Governor Shaktikanta Das-headed monetary policy committee (MPC) on Thursday (Today) maintained status quo on policy rates in its fifth bi-monthly monetary policy review of the financial year.
This halt came after five consecutive cuts. The short-term lending rate, or repo rate, was unchanged at 5.15 per cent. All six committee members voted against the rate cut.
RBI monetary policy Live updates :
• RBI MPC policy statement blames the unusual spike in onion prices for the surge in inflation has surged above the upper tolerance band around the target in December 2019, primarily on the back of the unusual spike in onion prices
• The RBI has revised CPI inflation projection upwards to 6.5% for Q4 of 2019-20, 5.4-5% for H1 of 2020-21; and 3.2% for Q3 of 2020-21, with risks broadly balanced.
• GDP growth for FY 2020-21 has been projected at 6% – in the range of 5.5-6% in H1 and 6.2% in Q3
• RBI said these decisions are 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.
•RBI has also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.
•RBI’s policy repo rate current stands at 5.15%.
• The RBI is not expected to cut interest rates before June.
• “The MPC will weigh limited explicit fiscal support for growth, still mixed signs of growth pickup and emerging headwinds to growth from global developments such as the health scare in China,” said A. Prasanna, chief economist at ICICI Securities Primary Dealership in Mumbai. “In this backdrop, the MPC might decide to wait for more data and clarity before making up its mind in April.”
• RBI can raise its near-term forecasts after inflation surged to 7.35% in December, the fastest pace in more than five years. The RBI’s previous projection was for price growth of 4.7%-5.1% in the six months through March 2020 and 3.8%-4% in the first half of the next fiscal year.
• All 37 economists in a Bloomberg survey predict the benchmark repurchase rate will stay at 5.15%, the lowest level since 2010.
• Investors will be looking for cues related to economic growth from the RBI statement.
• RBI’s MPC meeting comes just after the release of the Budget and Economic Survey.
• The three-day MPC meeting began on Tuesday.
• RBI will release its policy statement at 11:45 am while the MPC will hold a press conference from noon.
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