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RBI announces its first bi-monthly monetary policy for the new fiscal year

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On April 5, 2018, Reserve Bank of India (RBI) announced First Bi-Monthly Monetary Policy Statement for financial year 2018-19. This time too, the Policy Repo Rate has been kept unchanged.

RBI announces its first bi-monthly monetary policy for the new fiscal year
Post the First Bi-Monthly Monetary Policy Statement announcement, the policy rates and reserve ratios are as follows:

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 First Bi-Monthly Monetary Policy Statement:

  • Repo Rate has been kept unchanged at 6.00 per cent. 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. 
  • The six-member RBI Monetary Policy Committee (MPC) voted 5:1 for the decision. Only Dr. Michael Debabrata Patra voted for a 0.25 percent increase in repo rate.
  • Projected Consumer Price Index (CPI) inflation for 2018-19 is 4.7-5.1 per cent in first half of 2018-19 (i.e. from April 2018 – September 2018) and 4.4 per cent in H2 (i.e. from October 2018 – March 2019).
  • Projected CPI inflation has factored in a sharp moderation in food prices in February-March 2018, volatility in international crude prices, a normal monsoon, effective supply management by the Government and  impact of an increase in House Rent Allowances (HRA) for central government employees under the 7th Central Pay Commission.
  • Gross Domestic Product (GDP) growth is projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19.
  • Upbeat GDP growth projection for 2018-19 is based on visible signs of revival in investment activity and improvement in Global Demand which shall encourage exports and boost fresh investment.

Next meeting of RBI Monetary Policy Committee is scheduled on 5th and 6th June, 2018.