Sunday, April 22

RBI Releases Sixth Bi- Monthly Monetary Policy, Repo Rate Unchanged At 6%

On February 7, 2018, Reserve Bank of India (RBI) announced Sixth Bi-Monthly Monetary Policy Statement for financial year 2017-18. This time too, the Policy Repo Rate has been kept unchanged.

Post the Sixth 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 Second 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.

Monetary Policy

  • 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.
  • Estimated inflation for fourth quarter (Q4) of financial year 2017-18 i.e. January – March 2018 period is 1 per cent.
  • It is to be noted that, In December 2017, consumer inflation rose to a 17-month high of 5.21 per cent, which is much above RBI’s medium term target of 4 per cent.
  • Economic growth for 2017-18 is projected at 6.6 per cent.
  • For economic growth in 2018-19, RBI has given an upbeat projection of 7.2%. Stablisation of Goods and Services Tax (GST) regime, revival in investment activity, resolution of stressed assets under Insolvency and Bankruptcy Code (IBC) and recapitalisation of public sector banks have been highlighted as positive factors that will drive Indian economy in 2018-19. However, increasing commodity prices, especially of oil has been identified as an area of concern.

Next meeting of RBI Monetary Policy Committee is scheduled on 4th and 5th April 2018.

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