Monetary Policy Committee of the Reserve Bank of India (RBI) stood pat on policy rates, as it decides to wait for past policy actions, undertaken by the government and the central bank, to play out. The RBI said it will maintain an “accommodative stance as long as it is necessary”. With a no rate action, the repo rate—the rate at which banks borrow from it—remains unchanged at 5.15%. This is contrary to the result of a Mint survey, wherein eight of 10 bankers and economists expected a 25 basis points cut. RBI has cut policy rates by 135 basis points so far in 2019.
- MPC unanimously votes for status quo on repo rate
- Stance to remain accomodative as long as required: MPC
- FY20 real GDP growth projection lowered to 5% from 6.1%
- MPC sees scope for rate easing in the future
- MPC expects inflation to rise in the near term
- Delay in demand revival is a key downside risk to GDP
- MPC sees need to address impediments holding back investments
- Fall in deposit rate augurs well for loan rate transmission
- October-March 2020 CPI inflation seen at 4.7-5.1%
- April-Sept 2020 CPI inflation seen 3.8-4%
- Oct-March GDP growth seen at 4.9-5.5%
- Fall in deposit rate augurs well for rate transmission
“On the positive side, however, monetary policy easing since February 2019 and the measures initiated by the the government over the last few months are expected to revive sentiment and spur domestic demand. Taking into consideration these factors, real GDP growth for 2019-20 is revised downwards from 6.1 per cent in the October policy to 5.0 per cent – 4.9-5.5 per cent in H2 and 5.9-6.3 per cent for H1:2020-21,” it added.