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February 07, 2018

RBI's 6th Bi-Monthly Monetary Policy Review 2018 Highlights

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The Reserve Bank of India's Monetary Policy Committee (MPC) headed by  RBI Governor Urjit Patel, today (6th February 2018) presented it's sixth and final bi-monthly monetary policy for the current financial year. In view of firming inflation, the central bank kept the repo rate - the key rate at which the RBI lends to other banks - unchanged at 6 per cent. The reverse repo rate under the LAF (liquidity adjustment facility) remains at 5.75 per cent, and the marginal standing facility (MSF) rate and the bank rate at 6.25 per cent. Here are the major highlights of today's monetary policy statement.

RBI's 6th bi-monthly monetary policy review highlights

  • Key lending rate (repo) unchanged at 6 percent.
  • Reverse repo rate remains at 5.75 percent and marginal standing facility (MSF) rate and Bank Rate at 6.25 percent.
  • 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 percent in Q4 this fiscal and 5.1-5.6 percent in H1 of FY2018-19.
  • Inflation likely to ease to 4.5-4.6 percent 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 percent.
  • The RBI had last reduced the benchmark lending rate by 0.25 percentage points to 6 percent last August, bringing it to a 6-year low.
  • Next meeting of the Monetary Policy Committee (MPC) is on 4 and 5 April.
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