Monday, 10 December, 2018

RBI maintains status quo, keeps repo rate unchanged at 6.5%

File Pic:PTI File Pic:PTI
Jean Garcia | 05 December, 2018, 16:12

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday (December 5) kept key lending rate unchanged at 6.5 per cent after the conclusion of its fifth bi-monthly policy review. The reverse repo rate also remains unchanged at 6.25 per cent.

The monetary policy committee maintained the policy stance to "calibrated tightening".

This is for the second time in a row that the central bank did not tinker with the interest rate. With the market expecting RBI to hold the repo rate at 6.5%, Mint takes a look at the five things that could be on the MPC's radar.

The SLR is being cut in order to align it with the Liquidity Coverage Ratio (LCR) requirement.

While the Statutory Liquidity Ratio now remains unchanged at 19.5%, the RBI has said it will be gradually reduced to 18% over the next six quarters. Currently, SLR stands at 19.5 per cent. SLR refers to the share of bank's total deposit that it needs to maintain itself as liquid assets.

India vs Australia: Five Indian Bowlers To Watch Out For
Two of the bowlers to play in Adelaide are among the three worst specialist bowlers to have sent down 2000 balls in Australia . Archie, who bowls leg spin, will also meet up with the team on Tuesday ahead of the Adelaide Test match.

GDP growth retained at 7.4%: The MPC maintained GDP growth projections for 2018-19 has been projected at 7.4 per cent (7.2-7.3 per cent in H2) as in the October policy, and for H1:2019-20 at 7.5 per cent, with risks somewhat to the downside.

"The monetary policy completely evaluated current and evolving macroeconomic conditions and voted today to maintain status quo while reiterating its commitment to achieving the medium-term target for headline inflation at 4 percent on a durable basis", RBI governor Urjit Patel said in the press conference.

The RBI, however, lowered inflation forecast sharply for the second half (six months) of 2018-19 to 2.7 per cent-3.2 per cent.

What could be RBI's likely rate action?

India's GDP slowed to 7.1 percent in the September quarter even as retail inflation dropped to a one-year low of 3.31 percent in October.

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