Mumbai, In a suprise move, the Reserve Bank of India (RBI) on Friday kept the repo rate unchanged at 6.5 per cent.
Announcing the fourth Monetary Policy Committee (MPC) meeting today, RBI Governor Urjit Patel said the Repo rates was unaltered at 6.5 per cent.
Consequently, the reverse repo -- the rate at which the Reserve Bank borrows money from commercial banks within the country -- stood unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
The decision of the MPC is consistent with the stance of calibrated tightening 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 main considerations underlying the decision are set out in the statement below.The MPC changed the stance to calibrated tightening.
Most analysts expect the central bank to hike rates by 25 basis points (bps) when it announces monetary policy today.
However, the key thing to watch out for this time around is whether the RBI will change its policy stance.
In forex market, the rupee breached the crucial 74 level to trade at 74.07, down 49 paise. In the last policy meet, the RBI hiked repo rate by 25 basis points to 6.50 per cent, for the second time in a row.
Regarding the policy repo rate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Viral V. Acharya and Dr. Urjit R. Patel voted in favour of keeping the policy repo rate unchanged while Dr Chetan Ghate voted for an increase in the policy rate by 25 bps.
The MPC, in its report, has said headline inflation is expected to accelerate to 4.5 per cent by March 2019 quarter with upside risks.The RBI has retained GDP growth estimate at 7.4 per cent for FY19; to go up to 7.6 per cent in FY20.
The minutes of the MPC’s meeting will be published by October 19, 2018. 25. The next meeting of the MPC is scheduled from December 3 to 5.