RBI repo rate unchanged at 6.50 %, reverse repo rate at 6.25% |
The Reserve Bank of India (RBI) in its fourth bi-monthly meet left the repo rate unchanged at 6.50 per cent while the reverse repo rate remains at 6.25 per cent. The monetary policy stance has changed from neutral to `calibrated tightening`. The RBI stated that headline inflation is estimated to accelerate to 4.5 per cent by March 2019 quarter with upside risks. The central bank also stated in its policy document that FY19 GDP growth target remains unchanged at 7.4 per cent. CPI inflation is seen at 4 per cent in July-September and 3.9-4.5 per cent in October-March. The central bank`s Monetary Policy Committee said that “global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook. It is, therefore, imperative to further strengthen domestic macroeconomic fundamentals.Following the RBI announcement, the rupee breached 74-mark against US dollar for the first time. The rupee has been performing poorly for the past few months and the rise in repo rate is seen as an attempt by the RBI to curb further price fall. The rupee closed at 73.77 against the US dollar on Thursday.
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