Repo rate RBI monetary policy meet: 5 things to know
This is for the first time that six-member committee is meeting for three days instead of the usual two, due to certain administrative exigencies. The committee has been entrusted with the task of setting the benchmark interest rate after an amendment was passed through the Finance Act, 2016.
RBI monetary policy meet: The members of Reserve Bank of India’s Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, have been brainstorming on their decision over repo rate hike for the third straight day. While they are doing so, the country is waiting with bated breath. If repo rate is cut, there will be consequent relief in the form of cut in home, auto, other loan rates. Will that happen? Here are five things to watch out for in the wake of RBI's monetary policy of 2018-19.
1. This is for the first time that six-member committee is meeting for three days instead of the usual two, due to certain administrative exigencies. The committee has been entrusted with the task of setting the benchmark interest rate after an amendment was passed through the Finance Act, 2016.
2. Markets appeared divided on the RBI decision, with a small section believing the central bank may hike rates 0.25% to keep inflation under control and global inflows into the country strong. The BSE Sensex has rebounded over 69 points in opening trade, breaking its three-day losing run, ahead of the RBI's bi-monthly policy meet outcome due later in the day.
3. In the latest Reuters poll, most economists expect the repo rate to remain at 6 percent, a majority forecast the RBI to raise it by 25 basis points to 6.25 percent in August. The polls further opine that the RBI may use the June meeting to shift its policy communication to an explicit tightening bias away from the neutral bias it has held since February last year.
4. The 7-quarter high GDP growth rate of 7.7 per cent during the January-March period of 2017-18 and forecast of a normal monsoon have meanwhile reduced the clamour for a cut in the benchmark lending rate.
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5. In the previous Monetary Policy statement in April, the MPC had kept the repo rate and reverse repo rate unchanged at 6 percent and 5.75 percent respectively. The MPC also projected real Gross Domestic Product (GDP) growth of 7.4 percent in FY19, as against 6.6 percent in FY18. The last rate hike was announced by RBI in January 2014 when the repo rate was increased to 8 percent. Since then, RBI has either reduced the rate or maintained status quo.