Jun 06 2018

RBI hikes rate after 4.5 years!!

All the six members of Monetary Policy Committee (MPC), headed by Reserve Bank of India (RBI) Governor Urjit Patel, have decided to hike the key interest rate of India after 4.5 years since January 2014.

  • The RBI has increased the repo rate and reverse repo rate by 25 basis points each. After the hike, the Repurchase (Repo) rate stands at 6.25 per cent, whereas the Reverse Repo rate is at 6.00 per cent. The repo rate is the rate at which the RBI lends short-term money to the banks.
  • MPC has kept the stance neutral inspite of the repo rate hike.
  • Apr-Sep CPI is seen between 4.8-4.9 percent, while Oct-Mar CPI to be around 4.7 percent, maintaining commitment in achieving the medium term target of 4 percent headline inflation. MPC stated that the crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook, both on the upside and the downside.
  • GDP growth is projected in the range of 7.5-7.6 percent in H1 and 7.3-7.4 percent in H2

The equity market initially lost its morning gains, with Bank Nifty losing the maximum, but as of writing now, it has regained it back.  30 share BSE Sensex is now at 35200, and 50 share NSE Nifty stands at 10685, Rupee too lost 20 paisa and is back to hovering around 67.00 level against the dollar.