RBI releases First Bi-monthly Monetary Policy Statement 2018-19

Apr 5, 2018 16:42 IST
RBI releases First Bi-monthly Monetary Policy Statement 2018-19

The Reserve Bank of India (RBI) on April 5, 2018 released its First Bi-monthly Monetary Policy Statement 2018-19.

After assessing the current and evolving macroeconomic situation in the economy, the six member Monetary Policy Committee (MPC) decided to keep the Repo Rate under the Liquidity Adjustment Facility (LAF) unchanged at 6.0 percent.

Consequently, the Reverse Repo Rate under the LAF remains unchanged at 5.75 percent and the Marginal Standing Facility (MSF) Rate and the Bank Rate at 6.25 percent.

The decision of the MPC to keep the repo rate unchanged was in accordance with the objective of achieving the medium-term target for Consumer Price Index (CPI) inflation of 4 percent while supporting growth.

Chetan Ghate, Pami Dua, Ravindra Dholakia, Viral Acharya and RBI Governor Urjit Patel voted in favour of the monetary policy decision. However, Michael Debabrata Patra voted for an increase in the policy rate of 25 basis points.

This is the fourth policy review in sequence in which the MPC has kept the Repo Rate unchanged.


Key takeaways

• The retail inflation based on the Consumer Price Index (CPI) fell to 4.44 percent in February 2018 from 5.07 percent in January 2018. Considering this, the RBI lowered its April-September (H1) inflation projection to 4.7-5.1 percent from February’s 5.1-5.6 percent and 4.4 percent in H2.

• The fall in the retail inflation was due to the decline in inflation in food and fuel. Food inflation declined by 120 bps in February due to a sharp decline in vegetable prices.

• The revised formula for minimum support price as announced in the Union Budget 2018-19 for kharif crops may have an impact on inflation.

• The RBI projected economic growth of 7.4 percent for the current fiscal year, beginning on April 1, 2018.

• There are clearer signs of revival in investment activity as reflected in the sustained expansion in capital goods production and rising imports. Moreover, the improving global demand might encourage investment.


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Read more Current Affairs on: RBI , first Bi-monthly Monetary Policy , 2018-19 , reserve bank , repo rate

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