RBI MPC: Repo rate remains unchanged, GDP growth for 2020-21 pegged at 6 pct
RBI MPC: The Reserve Bank of India (RBI) has kept the repo rate change in its first Monetary Policy Committee meeting following the Union Budget.
RBI MPC: The Reserve Bank of India (RBI) has kept the repo rate change in its first Monetary Policy Committee meeting following the Union Budget. After the announcement, the repo rate remains at 5.15 per cent. All six members of Monetary Policy Committee vote in favour of maintaining status quo on interest rate. The committe pegged the GDP growth rate for 2020-21 at 6 per cent.
The Reserve Bank has also maintained its stance as accommodative. It said that the stance will remain as as long as it takes. "Economy continues to be weak, output gap remains negative," the Shanktikandas Das-led RBI panel said.
"Economic activity remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner. Given the evolving growth-inflation dynamics, the MPC felt it appropriate to maintain status quo,? the Monetary Policy Committee (MPC) said.
Addressing the media, RBI governor Shaktikanta Das said that there are other ways with which RBI can revive growth.
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The Reserve Bank said that since the MPC met last in December 2019, global economic activity has remained slow-paced, but is getting differentiated across geographies. It said that among the key advanced economies (AEs), the US economy grew by 2.1 per cent in Q4:2019, the same pace as in Q3, with slack in consumer spending offset by government expenditure. In the euro area, economic activity slowed down in Q4 as France and Italy shrank unexpectedly amid waning consumer confidence. Growth momentum in the UK appears to have weakened in Q4 as reflected in a decline in industrial production and tepid retail sales.
Since February 2019, MPC has cut the repo rate in five successive policy meetings and reduced the rates by 135 basis points, cumulatively. The past rate cuts began to get transmitted by banks to borrowers recently as is evident from the declining trend in banks` marginal cost of lending rates.
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