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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

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.

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

RBI said that recapitalisation of public sector banks along with resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC) will create demand for fresh investments.   "GVA (Gross Value Added) growth for 2017-18 is projected at 6.6 per cent," it said.

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

Viral Acharya, deputy RBI Governor The objective of the liquidity operations conducted by the Reserve Bank of India (RBI) are not to manage the price of bonds, but to drive its monetary policy goals, Deputy Governor Viral Acharya, said on Wednesday after the central bank's monetary policy meeting, damping expectations of bond purchases by the central bank.

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

Highlights of RBI policy: Q4FY18 inflation projection raised to 5.1% Following are the highlights of the RBI's 6th bi-monthly monetary policy statement: * Key lending rate (repo) unchanged at 6% * Reverse repo rate remains at 5.75% and marginal standing facility (MSF) rate and Bank Rate at 6.25% * Monetary policy's stance neutral * Petrol and diesel prices rose sharply in Jan, reflecting lagged pass-through of past increases in global crude prices * Retail inflation estimated at 5.1% in Q4 this fiscal and 5.1-5.6% in H1 of FY2018-19

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

There are five taxes on capital which will have an impact   There are five taxes on capital which will have an impact on investments: RBI Governor Urjit Patel.

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

"The focus of the Union Budget on the rural and infrastructure sectors is a welcome development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activity," it said.

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

RBI lowers economic forecast to 6.6% for FY18 RBI lowered the economic growth projection for 2017-18 to 6.6 per cent, but said that it will accelerate to 7.2 per cent in the next financial year as the roll-out of GST stabilises and credit offtake improves.

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

Sensex ends lower, Nifty below 10,500 as RBI keeps repo rate unchanged Benchmark indices ended lower on Wednesday after Reserve Bank of India kept the key policy rate unchanged at 6 per cent for the third consecutive time in view of firming inflation. Reverse Repo rate was also maintained at 5.75%.

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

Following are key highlights of the RBI's 6th bi-monthly monetary policy statement   * Key lending rate (repo) unchanged at 6 pc;   * Reverse repo rate remains at 5.75 pc and marginal standing facility (MSF) rate and Bank Rate at 6.25 pc;   * Monetary policy's stance neutral;   * Petrol and diesel prices rose sharply in Jan, reflecting lagged pass-through of past increases in global crude prices;   * Retail inflation estimated at 5.1 pc in Q4 this fiscal and 5.1-5.6 pc in H1 of FY2018-19;   * Inflation likely to ease to 4.5-4.6 per cent in H2 of FY19;   * Gross Value Added (GVA) growth for FY18 seen at 6.6 percent;   * GVA growth for 2018-19 projected at 7.2 percent;   * GST stabilising, which augurs well for economic activity;   * Early signs of revival in investment activity;   * RBI seeks pick-up in credit growth due to recapitalisation of PSBs and resolution proceedings under IBC   * Export growth expected to improve further on account of improving global demand;   * RBI says focus of Union Budget on rural and infrastructure sectors a welcome development;   * Five members voted in favour of status quo in interest rate; one member voted for increase of 0.25 pc;   * Next meeting of the MPC on April 4 and 5.

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

Even though the current account deficit narrowed sharply in Q2 of 2017-18 on a sequential basis, it was higher than its level a year ago, mainly due to widening of the trade deficit, says MPC.

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

Sensex falls 100 pts as RBI sounds hawkish.

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

With a view to promote a less cash economy, the incentive schemes have been reviewed by RBI and it has been decided to discontinue going forward the incentives for installation of Cash Recycler Machines (CRMs) and Automated Teller Machines (ATMs).

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

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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