Mumbai, Feb 6 : In line with market expectation, the Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at 5.15 per cent--a 10-year low-- in its last policy review of the financial year 2019-20 (FY20).
Similarly, the reverse repo rate stands unchanged at 4.90 per cent. Announcing the sixth bi-monthly policy the apex bank said in a statement that it will maintain 'accommodative' policy stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.
GDP growth forecast for the financial year 2020-21 (FY21) is projected at 6 per cent and in the range of 5.5-6.0 per cent in the first half of the next fiscal and 6.2 per cent in Q3 (OctoberDecember period). GDP growth for FY 2019-20 is seen at 5.0 per cent. "Going forward, the trajectory of inflation excluding food and fuel needs to be carefully monitored as the pass-through of remaining revisions in mobile phone charges, the increase in prices of drugs and pharmaceuticals and the impact of new emission norms play out and feed into inflation formation," the statement added.
Accordingly, the MPC will remain vigilant about the potential generalisation of inflationary pressures as several of the underlying factors cited earlier appear to be operating in concert. Addressing the media, RBI Governor Shaktikanta Das said that the repeat of status quo should not be seen as an indicator of future action.
He further said that economy remains weak and the output gap is negative. The RBI governor further said that transmission to credit markets are improving gradually and monetary transmission should help boost demand. "Have many instruments at our disposal to address the slowdown," Das added. The committee voted 6-0 in favour of the status quo of the interest rates. (UNI)