The Reserve Bank of India maintained status quo on the short-term lending rate – Repo Rate – at 6% in its first bi-monthly policy review of the financial year 2018-19.
The Reserve Bank of India maintained status quo on the short-term lending rate – Repo Rate – at 6% in its first bi-monthly policy review of the financial year 2018-19.
“On the basis of an assessment of the current and evolving macroeconomic situation1 at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6%," RBI said in a release.
On the whole, GDP growth is projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19 – in the range of 7.3-7.4 per cent in H1 and 7.3-7.6 per cent in H2 – with risks evenly balanced, the central bank said.
Chetan Ghate, Pami Dua, Ravindra H. Dholakia, Viral V. Acharya and Urjit R. Patel voted in favour of the monetary policy decision. However, Michael Debabrata Patra voted for an increase in the policy rate of
"With the sharp moderation in food prices in February-March, the inflation trajectory in H1:2018-19 is expected to be lower than the projection in the February statement, despite a likely reversal in food prices in H1," the RBI statement added.
“Several factors are likely to influence the inflation outlook. First, with the sharp moderation in food prices in February-March, the inflation trajectory in H1:2018-19 is expected to be lower than the projection in the February statement, despite a likely reversal in food prices in H1. Overall food inflation should remain under check on the assumption of a normal monsoon and effective supply management by the Government. Second, international crude oil prices have become volatile in the recent period, with a distinct hardening bias in the second half of March, even as the increase in shale production was more than expected. This has adversely impacted the outlook for crude oil prices. Third, on current assessment, Indian domestic demand is expected to strengthen during the course of the year. Fourth, the statistical impact of an increase in HRA for central government employees under the 7th CPC will continue till mid-2018, and gradually dissipate thereafter,” the statement said.
The next meeting of the MPC is scheduled on June 5 and 6, 2018
Meanwhile,
Market indices opened sharply higher on Thursday, with the Sensex rising 383.96 points to 33,403.03 and the Nifty gaining 124.10 points at 10,252.50, ahead of the announcement by Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), later in the day.
The market breadth remained strong, with about eight shares advancing for every share falling on the Bombay Stock Exchange (BSE).
All sectoral indices were in the green, with the metal, realty rising more than two percent.
Apollo Tyres rallied 4.5 percent while Balkrishna Industries and MRF gained approximately three percent.
Hindalco, UPL Ltd., Tata Motors, Vedanta and Bajaj Finance gained about two to three percent.
Bharti Infratel and Bharti Airtel lost approximately one percent
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