RBI keeps repo rate, reverse repo rate unchanged

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Mumbai (Maharashtra) [India] : The Reserve Bank of India (RBI) on Friday kept the repo rate and reverse repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent and 6.25 per cent, respectively. The six-member monetary policy committee (MPC) after its meeting said the decision was taken on the basis of a 5:1 majority. “The decision of the MPC is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving medium term target for consumer price index (CPI) inflation of 4 per cent within a band of 2 per cent while supporting growth,” a statement from the RBI read.

The MPC said the GDP is expected to grow by 7.4 per cent in 2018-19, up from 6.7 per cent in the previous fiscal. It further noted that inflation will clock 3.8 per cent in the third quarter of 2018-19 and 4.5 per cent in the next quarter of the current fiscal. As per the RBI panel, the hike in minimum support price (MSP) for Kharif crops, rising crude oil prices and uncertain global financial environment may hamper inflation. After the last policy meeting, the RBI in August had hiked the repo rate by 25 basis points to 6.5 per cent, while maintaining a neutral stance on the stability in the market.