RBI Kept Repo Rate at 6%

The Reserve Bank of India (RBI) retained its key interest rate, the repo rate, at 6 percent.

The central bank had last cut rates at its August 2017 meeting. The RBI’s Monetary policy committee had its sixth bimonthly meeting for this fiscal yesterday and today. The decision of the 6-member committee was by a majority of 5 to 1.

Dr Chetan Ghate, Dr Pami Dua, Dr Viral V. Acharya, Dr Urjit R. Patel and Dr Ravindra Dholakia were all in favour of status quo while Dr Michael Patra was in favour of a 25 bps hike.

In the Sixth Bi-monthly Monetary Policy Statement, 2017-18 Resolution of the Monetary Policy Committee (MPC) RBI said, “On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent.”

Consequently, the reverse repo rate under the LAF remains at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.

The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. The main considerations underlying the decision are set out in the statement below, said the statement.