April 25, 2018, 9:46 pm IST
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RBI keeps key rates unchanged

RBI keeps key rates unchanged

 Apr 05, 2018

In line with the expectation, the Reserve Bank of India (RBI) kept the repo rate unchanged at six per cent, on concerns over the rising crude oil price and inflation above its four per cent target.

Announcing the first bi-month policy, RBI Governor Urjit Patel said the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent. Consequently, the reverse repo rate under the LAF remains at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.

Five of the six members of RBI's MPC voted in favour of keeping the benchmark interest rate unchanged, while one member, MD Patra, recommended a 25 basis points (bps) rate increase. The decision of MPC is consistent with the neutral stance of monetary policy, in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of four per cent within a band of +/- two per cent, while supporting growth.

This is the fourth time, when the RBI maintained status quo on repo rate at six per cent, which is lowest in over seven years, since November 2010.The central bank also raised inflation forecast for the first half of the fiscal year 2019 between the range of 5.1% and 5.6%. While inflation has softened since the last meeting of RBI, the crude oil prices after brief fall are on the upswing again.

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