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RBI monetary policy: Repo rate unchanged at 6%, inflation forecast hiked

RBI deputy governor said, 'Liquidity conditions continue to normalise'

BS Web Team  |  New Delhi 

Reserve Bank of India

Key highlights   RBI maintains status quo, keeps repo rate unchanged at 6 per cent; maintains neutral stance.   MSF, bank rate unchanged at 6.25 per cent   Real GVA growth aim stays at 6.7 per cent with risks evenly balanced   MPC committed to keep CPI close to 4 per cent on durable basis Monetary policy highlights:   — Q2 Growth was lower than projected in the October policy   — Recent increase in crude prices may have a negative impact on GVA growth   — Shortfalls in kharif production and rabi sowing pose downside risks to agri outlook   — There has been some pick-up in credit growth in recent months RBI's growth projections for FY18   — FY18 real GVA maintained at 6.7 per cent   — Q3 GVA seen at 7 per cent   — Q4 GVA seen at 7.8 per cent Highlights of Monetary Policy:    — Upward trajectory in flation may continue in the near-term   — Impact of HRA by the central government is expected to peak in December   — Recent rise in international crude oil prices may sustain   — Q3, Q4 inflation estimated in 4.3-4.7 per cent range RBI Governor Urjit Patel: Governance reforms for all PSU Banks will also feature for all banks. PSU Bank recap bonds to be front-loaded for banks with better balancesheets. RBI Governor Urjit Patel: MPC considered upside pressure on food and living costs.

The (MPC) of the (RBI), led by Governor Urjit Patel, kept its policy rate unchanged on Wednesday, as widely expected, after accelerated to a seven-month high and stronger economic growth reduced the need for monetary stimulus.

The market also seemed to be of the view that the six-member will not change the policy Besides rising inflation, the issues of hardening bond yields and tightening liquidity have reduced the scope for loosen its stance.

Ten economists and bond dealers polled by Business Standard said the policy was expected to stay put at six per cent. Even as the policy stance would likely remain ‘neutral’, many economists said this could be the end of a rate-easing cycle.

In the October review of its monetary policy, the MPC had kept the benchmark interest rate unchanged and lowered its growth forecast for the country’s economy in 2017-18 to 6.7 per cent.

The had last tinkered with the policy rate in August, when it brought the down by 25 basis points to a six-year low of six per cent.

The also kept the reverse unchanged at 5.75 per cent. Wednesday's decisions were widely predicted after the annual rate of consumer increased in October to 3.58 per cent, driven by higher food and crude oil prices. That's still low by Indian standards, but not far from the central bank's 4 per cent target.

Nonetheless, some analysts still see scope for a rate cut should accelerate less than expected. That is because the economy, though recovering from July's bumpy launch of a national sales tax, is not yet growing fast enough to create the jobs needed for India's young workforce.

The on Wednesday left its policy stance "neutral", which might leave the door open for a rate move at its next meeting in February. The said it would track economic growth and data, adding that risks to both "evenly balanced".

Five members of the (MPC) voted to keep rates unchanged, with one voting for a 25 bps cut.

"Keeping in mind the output gap dynamics, the MPC decided to continue with the neutral stance and watch the incoming data carefully," the said in a statement.

First Published: Wed, December 06 2017. 15:42 IST

RBI monetary policy: Repo rate unchanged at 6%, inflation forecast hiked

RBI deputy governor said, 'Liquidity conditions continue to normalise'

RBI deputy governor said, 'Liquidity conditions continue to normalise' The (MPC) of the (RBI), led by Governor Urjit Patel, kept its policy rate unchanged on Wednesday, as widely expected, after accelerated to a seven-month high and stronger economic growth reduced the need for monetary stimulus.
The market also seemed to be of the view that the six-member will not change the policy Besides rising inflation, the issues of hardening bond yields and tightening liquidity have reduced the scope for loosen its stance.

Ten economists and bond dealers polled by Business Standard said the policy was expected to stay put at six per cent. Even as the policy stance would likely remain ‘neutral’, many economists said this could be the end of a rate-easing cycle.

In the October review of its monetary policy, the MPC had kept the benchmark interest rate unchanged and lowered its growth forecast for the country’s economy in 2017-18 to 6.7 per cent.

The had last tinkered with the policy rate in August, when it brought the down by 25 basis points to a six-year low of six per cent.

The also kept the reverse unchanged at 5.75 per cent. Wednesday's decisions were widely predicted after the annual rate of consumer increased in October to 3.58 per cent, driven by higher food and crude oil prices. That's still low by Indian standards, but not far from the central bank's 4 per cent target.

Nonetheless, some analysts still see scope for a rate cut should accelerate less than expected. That is because the economy, though recovering from July's bumpy launch of a national sales tax, is not yet growing fast enough to create the jobs needed for India's young workforce.

The on Wednesday left its policy stance "neutral", which might leave the door open for a rate move at its next meeting in February. The said it would track economic growth and data, adding that risks to both "evenly balanced".

Five members of the (MPC) voted to keep rates unchanged, with one voting for a 25 bps cut.

"Keeping in mind the output gap dynamics, the MPC decided to continue with the neutral stance and watch the incoming data carefully," the said in a statement.
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Business Standard
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RBI monetary policy: Repo rate unchanged at 6%, inflation forecast hiked

RBI deputy governor said, 'Liquidity conditions continue to normalise'

The (MPC) of the (RBI), led by Governor Urjit Patel, kept its policy rate unchanged on Wednesday, as widely expected, after accelerated to a seven-month high and stronger economic growth reduced the need for monetary stimulus.

The market also seemed to be of the view that the six-member will not change the policy Besides rising inflation, the issues of hardening bond yields and tightening liquidity have reduced the scope for loosen its stance.

Ten economists and bond dealers polled by Business Standard said the policy was expected to stay put at six per cent. Even as the policy stance would likely remain ‘neutral’, many economists said this could be the end of a rate-easing cycle.

In the October review of its monetary policy, the MPC had kept the benchmark interest rate unchanged and lowered its growth forecast for the country’s economy in 2017-18 to 6.7 per cent.

The had last tinkered with the policy rate in August, when it brought the down by 25 basis points to a six-year low of six per cent.

The also kept the reverse unchanged at 5.75 per cent. Wednesday's decisions were widely predicted after the annual rate of consumer increased in October to 3.58 per cent, driven by higher food and crude oil prices. That's still low by Indian standards, but not far from the central bank's 4 per cent target.

Nonetheless, some analysts still see scope for a rate cut should accelerate less than expected. That is because the economy, though recovering from July's bumpy launch of a national sales tax, is not yet growing fast enough to create the jobs needed for India's young workforce.

The on Wednesday left its policy stance "neutral", which might leave the door open for a rate move at its next meeting in February. The said it would track economic growth and data, adding that risks to both "evenly balanced".

Five members of the (MPC) voted to keep rates unchanged, with one voting for a 25 bps cut.

"Keeping in mind the output gap dynamics, the MPC decided to continue with the neutral stance and watch the incoming data carefully," the said in a statement.

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Business Standard
177 22