A prolonged pause on rates becoming the base case for monetary policy

Incoming data on growth will become increasingly important now

Acting along the expected lines, the monetary policy committee (MPC) voted to keep the repo rate unchanged at 6 per cent and continue with a neutral policy stance. Maintaining caution on inflation, with CPI inflation expected to rise above the target of 4 per cent in November, the MPC was expected to leave rates unchanged. Noting the upward shift in the trajectory of crude oil prices along with some hardening of core inflation, the forecast for headline inflation has been raised marginally to 4.3-4.7 per cent for the rest of FY18. 

The risks to this forecast are seen as evenly balanced.