Breaking News

You are here » Indian-Commodity  :  Economy  :  RBI keeps repo rate unchanged at 6.50%; lowers inflation forecast for H2FY19

06-Dec2018

RBI keeps repo rate unchanged at 6.50%; lowers inflation forecast for H2FY19

The Reserve Bank of India (RBI), in its fifth bi-monthly monetary policy review of 2018-19, has kept repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50%, in line with expectations, taking into account easing global crude prices, benign inflation and moderation in economic growth. This is for the second time in a row that the central bank maintained status quo. Consequently, the reverse repo rate under the LAF stood at 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%. The RBI also maintained 'calibrated tightening' stance. The decision of the MPC is consistent the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.

However, the RBI has decided to reduce statutory liquidity ratio (SLR), the portion of funds which banks are required to park in treasury bills and other instruments, by 0.25% every quarter beginning January. The calibrated reduction in SLR will continue till it reaches 18% of the net demand and time liabilities (NDTL) as part of aligning it with the liquidity coverage ratio (LCR). The current SLR is 19.5%.The first reduction of 25 basis points (bps) will take effect in the quarter commencing January 2019.

On the inflation front, the Central Bank has lowered retail inflation projection in the range of 2.7-3.2% for the second half of the current fiscal (H2FY19) and 3.8-4.2% in H1 FY20, with risks tilted to the upside, citing normal monsoon and moderate food prices. It added that the broad-based weakening of food prices imparts downward bias to the headline inflation trajectory going forward. Earlier, it had projected the retail inflation to be around 3.9-4.5% in the October-March period of 2018-19. It said the projected inflation path remains unchanged after adjusting for the HRA impact of central government employees as this impact dissipates completely from December 2018 onwards.


Related News

View all news

Bank credit growth increases 14.5%, deposits up 9.63%

The Reserve Bank of India (RBI) in its latest report has showed that bank credit growth increased by 14.5 percent at Rs 94.29 lakh crore, while deposits grew at a tepid 9.63 percent to Rs 121.22 lakh crore......

Direct tax collection stands at Rs 7.89 lakh crore in April-January of FY19

Net direct tax collection stood at Rs 7,88,930 crore in the April-January period of current fiscal (2018-19). The Minister of State for Finance Shiv Pratap Shukla has said there were 9.92 crore direct......

Rate cut by RBI to boost economy, make loan affordable to small businesses: Goyal

After the Reserve Bank of India (RBI) cut repo rate in its latest bi-monthly policy, Finance Minister Piyush Goyal has said the RBI's this move will give a boost to the economy by providing affordable......

Top News

View all news

Paramount Communications bags major order from Kerala State Electricity Board

Paramount Communications has bagged orders worth Rs 69.53 crore from Kerala State Electricity Board, Kerala. The order is for supply of HT & LT Aerial Bunch Cables, with a delivery schedule of......

Cyient completes acquisition of remaining 26% stake in Cyient DLM

Cyient has completed acquisition of remaining 26% stake in Cyient DLM. Post to this acquisition, Cyient DLM has now become a wholly owned subsidiary of the company. Earlier, the company had signed definitive......

NBCC bids to take over bankruptcy-bound Jaypee Infratech

NBCC (India) has bid to acquire bankruptcy-bound Jaypee Infratech and complete stalled over 20,000 housing units in Noida in the state of Uttar Pradesh. A meeting of the committee of creditors will be......