RBI keeps policy rate unchanged at 6%

Prime News, National, Business, Mumbai, April 5:- The Reserve Bank today stuck to the widely expected status quo in key rates citing uncertainties over inflation, which may be fuelled by rising crude oil prices, fiscal slippages and higher prices of foodgrain.

The Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel expects the growth rate to accelerate to 7.4 per cent in 2018-19, up from 6.6 per cent last fiscal, ended March 31, mainly on account of revival of investment activity.

With regard to prices, the MPC lowered retail inflation target for the first half of current fiscal to 4.7-5.1 per cent on sharp moderation in food price rise.

The status quo policy of RBI will be neutral to the EMIs for housing and vehicle loan borrowers, but banks are free to tinker with both deposit and lending rate depending on their asset liability position.

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 4 per cent within a band of +/- 2 per cent, while supporting growth.

The MPC maintained status quo for the fourth consecutive time since August last year.

Following the decision, the repo rate, at which the central bank lends short-term money to other banks, will continue to stay at 6 per cent. The reverse repo, rate at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 per cent.

This is the first bi-monthly monetary policy for 2018-19 and the next would be announced on June 6.-(NGB, Inputs: Agencies)

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