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RBI announces 4th Bi-Monthly Monetary Policy

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On October 4, 2017, Reserve Bank of India (RBI) announced Fourth Bi-Monthly Monetary Policy Statement for financial year 2017-18. This time the Policy Repo Rate has been kept unchanged.

Post the Fourth Bi-Monthly Monetary Policy Statement announcement, the policy rates and reserve ratios are as follows:
RBI

Policy Repo Rate 6.00% Unchanged – since 2nd August 2017
Reverse Repo Rate 5.75% Unchanged – since 2nd August 2017
Marginal Standing Facility Rate 6.25% Unchanged – since 2nd August 2017
Bank Rate 6.25% Unchanged – since 2nd August 2017
Cash Reserve Ratio (CRR) 4.00% Unchanged – since 9th February 2013
Statutory Liquidity Ratio (SLR) 19.50% With Effect from 14th October 2017

Highlights of RBI’s Second Bi-Monthly Monetary Policy Statement:

  • Repo Rate has been kept unchanged at 6.00%. Consequently, the Reverse Repo Rate at 5.75 per cent, marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent too remains unchanged.
  • Statutory Liquidity Ratio (SLR) has been cut by 50 basis points to 19.50 per cent with effect from October 14, 2017.
  • The six-member RBI Monetary Policy Committee (MPC) voted 5:1 for the decision. Only Ravindra Dholakia (External Member) voted for a 0.25 percent reduction in repo rate.
  • RBI has projected inflation to stay in the range of 4.2-4.6 per cent in the second half of 2017-18.
  • Economic growth forecast has been revised down to 6.7 per cent from the August 2017 projection of 7.3 per cent.
  • Loss of growth momentum in Q1 of 2017-18 and adverse impact on the manufacturing sector owing to uncertainties triggered by Goods & Services Tax (GST) implementation have been cited as primary reasons for downward revision of growth forecast.

Next meeting of RBI Monetary Policy Committee is scheduled on 5th and 6th December 2017.