RBI monetary policy: The Indian central bank signals a prolonged pause

Growth momentum is expected to accelerate in FY20 compared to FY19 and bank credit growth has already started increasing

In an unanimous decision, the Reserve Bank of India (RBI) kept the repo rate unchanged in the 5 December policy, while continuing with the “calibrated tightening” monetary stance. Five monetary policy committee members voted in favour of the monetary stance remaining unchanged, while Ravindra Dholakia voted for a neutral stance, in line with his past decision.

The central bank decided to lower the statutory liquidity ratio (SLR) by 25 basis points over six quarters to 18 per cent starting January 2019.

The RBI lowered its inflation projection further to 2.7-3.2 per cent (from 3.9-4.5 per cent earlier) and to 3.8-4.2