Aug 01 2018

RBI Monetary Policy Highlights

The RBI Monetary Policy Committee (MPC), in its meeting today, increased the Repo rate by 25 bps. The repo rate now stands at 6.5%. 5 MPC members voted for a hike while 1 voted against.
  • The MPC continued with its neutral stance on policy.
  • Reverse Repo adjusts to 6.25% from 6%.
  • MSF and Bank rate adjusts to 6.75%.
  • FY19 GDP growth forecast retained at 7.4%
  • The Central Bank indicated that Apr-Sep GDP growth is seen at 7.5%-7.6%
  • Q1FY20 GDP growth seen at 7.5%
  • CPI inflation projected at 5% for Q1FY20 with risks evenly balanced
  • Apr-June CPI inflation seen at 5%
  • Jul-Sept CPI inflation seen at 4.2%
  • Oct-Mar CPI inflation seen at 4.8%

The RBI Governor highlighted that capital flows to emerging markets have declined with the rising dollar. Moreover, mounting trade tensions and tightening financial conditions have increased.

The Governor stressed the need to monitor inflation uncertainty in the coming months. The governor also took note that recent softening of commodity prices and GST rate cuts can moderate inflation.