Monetary Policy : RBI keeps key lending rates unchanged

June 7, Wednesday : The Reserve Bank of India has kept repo rate unchanged at 6.25 per cent while reverse repo rate unchanged at 6 percent.

The six-member Monetary Policy Committee (MPC) chaired by RBI Governor Urjit Patel announced the Second Bi-monthly Monetary Policy Statement for 2017-18 on Wednesday.

While addressing press conference in Mumbai after meeting , Urjit Patel said the recent GDP shows that the economy started slowing before demonetisation, citing that the slowdown of GDP was more due to transitory factors.

However, to induce liquidity into the financial system, the central has reduced Statutory Liquidity Ratio (SLR) by 50 basis point to 20 percent  which will be effective from June 24.  MSF,CRR and Bank rate are also same.

The apex bank in its review reduced economic growth projection by 10 basis points to 7.3 percent.

RBI also projected that inflation remain in the range of 2.0-3.5 percent for the first half , while 3.5-4.5 percent will be in the second half of 2017-18.

In its review, the central bank cautioned against rush of farm loan waivers,warning of a risk on fiscal slippages and inflationary spillovers.

RBI Governor said,  “Farm loan waiver is a path that needs to be tread carefully.”

However, the neutral stance of RBI on monetary policy is quite similar to as anticipated by the economists

According to Reuters poll,  56 out of 60 analysts anticipated that  the RBI monetary policy committee to keep its repo rate unchanged at a 6-1/2 year low of 6.25 percent for a fourth meeting in a row. They also expected the reverse repo rate to be left at 6.00 percent.

“Given the inflation trajectory and as the liquidity in enough in the market, it is unlikely that there would be any rate cut this time. I think commentary of the policy will be benign,” State Bank of India DMD and Chief Financial Officer Anshula Kant told news agency  PTI.

Wefornews Bureau

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