Bank of India keeps repo rate unchanged at 6%
7 Dec. 2017
Reserve Bank of India kept its key lending rate unchanged after its
monetary policy review, on wednesday. The 6-member Monetary
Policy Committee headed by Reserve Bank of India Governor Urjit Patel kept
the repo rate, the rate at which the RBI lends, short-term, to banks,
unchanged at 6 per cent. The reverse repo rate was kept steady at
5.75 per cent.
The Reserve Bank said the reason for the decision was achieving the
medium-term target for consumer price index inflation of 4 per cent, while
Expecting the price situation to harden, the RBI raised its inflation
estimate to 4.3 to 4.7 per cent, from the earlier projection of 4.2 to 4.6
per cent, for the second half of the current fiscal.
The MPC decided to continue with its neutral policy stance. The apex bank
retained its GDP growth forecast of 6.7 per cent for 2017-18.
The Reserve Bank said the recent rise in global crude oil prices may
sustain. And it said the implementation of farm loan waivers by some
states, partial rollback of excise duty and VAT in the case of petroleum
products, and a decrease in revenue due to a reduction in GST rates may
result in fiscal slippage.
Finance Ministry has said, the Monetary Policy Committee (MPC) in its
fifth bi-monthly policy statement has recognized that inflation remains
firmly under control.
Taking note of the MPC statement, the Ministry said that it has retained
its inflation projection for the second half of the financial year 2018
while assessing that the risks to this projection are evenly balanced.
The Ministry said, due to this reason, it has maintained a neutral policy
The MPC has also retained its annual GVA forecast for the financial year
2018 of 6.7 per cent recognizing several significant developments and
emphasizing the Government’s reform efforts such as GST, Bank
Recapitalization Package and improving Ease of Doing Business Ranking.