The Reserve Bank left its benchmark lending rate unchanged at 6.25%, on April 6, 2017, for the third policy review in a row, citing upside risk to inflation. It however increased the reverse repo rate at which it pays to lenders, by 0.25% to 6%, narrowing the policy rate corridor.
Given the upside risks to inflation and excess liquidity in the system, the repo rate has been retained at 6.25% but the reverse repo and MSF have been revised upwards by 0.25%, the central bank said in the first bi-monthly monetary policy review of 2017-18. The central bank said the policy decisions are unanimous.
On the basis of gross value add, RBI sees the economy accelerating to 7.4% in the current fiscal, up from 6.7% in 2016-17.
See also: Unchanged repo rate leaves home buyers unconvinced about banks being flush with funds
However, the monetary authority said it is worried on three fronts on the inflation and the general economy. The first stems from a possible El Nino impact on the monsoon. The second worry arises from the GST implementation and the third upside risks to inflation comes from the seventh pay commission award, according to the Monetary Policy Committee.
“For 2017-18, inflation is projected to average 4.5% in the first half and 5% in the second half,” the RBI said.
“The main fear stems from the uncertainty surrounding the outcome of the south west monsoon, in view of the rising probability of an El Niño event around July-August, and its implications for food inflation,” the RBI said.
Press Trust of India (PTI), headquartered in New Delhi, is India’s largest news agency. It was registered in 1947 and started operations in 1949. PTI has more than 400 journalists and 500 stringers, who generate more than 2,000 stories and 200 photographs every day. Subscribers to PTI’s feed include the mainstream media, research groups, specialised presses, companies, government organisations and NGOs.
Facebook: https://www.facebook.com/PressTrustofIndia
Twitter: https://twitter.com/PTI_News
Email: [email protected]
Related Posts
RBI keeps repo rate unchanged, provides greater liquidity for loans.
RBI keeps lending rate unchanged at 6.25%.
Housing EMIs may get cheaper as RBI cuts key lending rate by 0.25%, to its lowest in 6 years.
RBI keeps key interest rates unchanged.
RBI hikes interest rate by 0.25 per cent on inflationary concerns.
RBI leaves key interest rates unchanged.
