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RBI monetary policy LIVE: RBI keeps repo rate at 6%, flags inflation risks

RBI sees pick in credit growth due to bank recapitalisation and resolution proceedings under IBC

BS Web Team  |  New Delhi 

Urjit Patel, RBI Governor
RBI Governor Urjit Patel

Having a fiscal stance conducive to achieving 4% CPI target is desirable. Shifting away from stated fiscal path is not conducive to our objectives, says RBI Governor Urjit Patel Key takeaways   — Repo rate unchanged   — Inflation forecast raised   — Inflation Outlook: CPI inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside. RBI monetary policy committee   The MPC notes that the inflation outlook is clouded by several uncertainties on the upside. OUTLOOK   RBI monetary policy committee   Taking into consideration the above factors, GVA growth for 2018-19 is projected at 7.2 per cent overall – in the range of 7.3-7.4 per cent in H1 and 7.1-7.2 per cent in H2 – with risks evenly balanced. OUTLOOK   RBI monetary policy committee   Turning to the growth outlook, GVA growth for 2017-18 is projected at 6.6 per cent. Beyond the current year, the growth outlook will be influenced by several factors.   1.  GST implementation is stabilising, which augurs well for economic activity.   2. There are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports.   3. The process of recapitalisation of public sector banks has got underway. Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This should improve credit flows further and create demand for fresh investment.   4. Although export growth is expected to improve further on account of improving global demand, elevated commodity prices, especially of oil, may act as a drag on aggregate demand.   OUTLOOK   RBI monetary policy committee   The projected moderation in inflation in the second half is on account of strong favourable base effects, including unwinding of the 7th CPC’s HRA impact, and a softer food inflation forecast, given the assumption of normal monsoon and effective supply management by the Government.

The Reserve Bank kept the key policy rate unchanged at 6 per cent for the third consecutive time today in view of firming inflation.

The Monetary Policy Committee (MPC), headed by Governor had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.

In its December review, the MPC had kept the benchmark unchanged on concerns of a possible price rise but had left the door ajar for a rate cut in future.

Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items. The retail inflation, based on Consumer Price Index (CPI), was 4.88 per cent in November. In December 2015, it was 3.41 per cent.

Key takeaways

unchanged

— Inflation forecast raised

— Inflation Outlook: inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside.

First Published: Wed, February 07 2018. 14:08 IST
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RBI monetary policy LIVE: RBI keeps repo rate at 6%, flags inflation risks

RBI sees pick in credit growth due to bank recapitalisation and resolution proceedings under IBC

RBI sees pick in credit growth due to bank recapitalisation and resolution proceedings under IBC
The Reserve Bank kept the key policy rate unchanged at 6 per cent for the third consecutive time today in view of firming inflation.

The Monetary Policy Committee (MPC), headed by Governor had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.

In its December review, the MPC had kept the benchmark unchanged on concerns of a possible price rise but had left the door ajar for a rate cut in future.

Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items. The retail inflation, based on Consumer Price Index (CPI), was 4.88 per cent in November. In December 2015, it was 3.41 per cent.

Key takeaways

unchanged

— Inflation forecast raised

— Inflation Outlook: inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside.

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Business Standard
177 22

RBI monetary policy LIVE: RBI keeps repo rate at 6%, flags inflation risks

RBI sees pick in credit growth due to bank recapitalisation and resolution proceedings under IBC

The Reserve Bank kept the key policy rate unchanged at 6 per cent for the third consecutive time today in view of firming inflation.

The Monetary Policy Committee (MPC), headed by Governor had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.

In its December review, the MPC had kept the benchmark unchanged on concerns of a possible price rise but had left the door ajar for a rate cut in future.

Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items. The retail inflation, based on Consumer Price Index (CPI), was 4.88 per cent in November. In December 2015, it was 3.41 per cent.

Key takeaways

unchanged

— Inflation forecast raised

— Inflation Outlook: inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside.

image
Business Standard
177 22