RBI keeps repo rate unchanged  

Reserve Dank of India Governor Shaktikanta Das at the fifth bi-monthly Monetary Policy statement on December 5.

New Delhi (NVI): The Monetary Policy Committee (MPC) led by the Reserve Bank of India (RBI) Governor Shaktikanta Das, today decided to keep the policy repo rate under the Liquidity Adjustment Facility (LAF) at 5.15 per cent and reverse repo rate at 4.90 per cent unchanged.

The RBI also maintained status quo on marginal standing facility (MSF) rate and the Bank Rate at 5.40 per cent.

The country’s central bank today released its fifth bi-monthly monetary policy statement for 2019-20.

On the growth outlook, the RBI has lowered its real GDP growth forecast for 2019-20 from 6.1 per cent in the October policy to 5 per cent.

The RBI revised the CPI inflation projection upwards to 5.1-4.7 per cent for H2:2019-20 and 4.0-3.8 per cent for H1:2020-21, with risks broadly balanced.

While keeping the repo rate unchanged the RBI said, “The MPC recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture. Accordingly, the MPC decided to keep the policy repo rate unchanged and continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.”

The MPC noted that economic activity has weakened further and the output gap remained negative. However, several measures already initiated by the Government and the monetary easing undertaken by the Reserve Bank since February 2019 are gradually expected to further feed into the real economy.

The RBI Governor said that rise in vegetable prices was most likely to continue in the immediate months. However, a pick-up in arrivals from the late kharif season along with measures taken by the Government to augment supply through imports, should help bring down the prices by early February 2020.