RBI keeps Repo rate unchanged at 5.15%, Revises growth projections downwards to 5%

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Mumbai: With a view to keep the inflation in control, the RBI on Thursday kept Repo Rate unchanged at 5.15%. Consequently, the reverse repo has also remained unchanged at 4.9% and the marginal standing facility (MSF) rate and the Bank Rate at 5.40 per cent.

RBI has also revised the CPI Inflation projection upwards to 5.1-4.7% in the second half of the current financial year.

“On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (December 5, 2019) decided to  keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15 per cent. Consequently, the reverse repo rate under the LAF remains unchanged at 4.90 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 5.40 per cent” RBI said after the MPC meeting.

 

“ The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent while supporting growth” it added.

The central bank also revised the growth outlook downwards to 5% in the 2019-20 financial year.

“Various high-frequency indicators suggest that domestic and external demand conditions have remained weak. Based on the early results, the business expectations index of the Reserve Bank’s industrial outlook survey indicates a marginal pickup in business sentiments in Q4. On the positive side, however, monetary policy easing since February 2019 and the measures initiated by the Government over the last few months are expected to revive sentiment and spur domestic demand” RBI said.

“Keeping this in mind, real GDP growth for 2019-20 is revised downwards from 6.1 per cent in the October policy to 5.0 per cent –4.9-5.5 per cent in H2 and 5.9-6.3 per cent for H1:2020-21” RBI said.

 

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