RBI keeps key rate unchanged

RBI keeps repo rate unchanged at 6 percent, stance stays at 'neutral'

RBI keeps repo rate unchanged at 6 percent, stance stays at 'neutral'

India Inc today said the RBI's decision to keep policy rates unchanged was on expected lines, even as it hoped the central bank would soon cut interest to boost demand and spur investments in the country. "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4% on a durable basis", said the first bi-monthly monetary policy for 2018-19.

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The RBI has projected consumer inflation for FY19 to 4.7-5.1 per cent in the first half of FY19 and 4.4 per cent in the second half as against the forecast of 5.1-5.6 per cent and 4.5 -4.6 per cent, respectively, in the last policy review.

For the second half of the year, it expects CPI inflation to be around 4.4 per cent, including the impact of higher house rent allowance for central government employees, compared with its earlier forecast of 4.5 per cent to 4.6 per cent.

"RBI regulated institutions are required to stop having business relations with the entities dealing in virtual currencies forthwith and unwind the existing relation in three months", RBI Deputy Governor B P Kanungo said.

On the global front, the RBI assessed the potential trade wars, the advancing U.S. economy, a buoyant Euro Zone, and growth of the Japanese economy in eight straight quarters till Q4:2017.

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Assocham President Sandeep Jajodia said, "The RBI has rightly flagged certain issues like the impact of MSP (minimum support price) revision on the prices and possible fiscal slippages at both the Centre and the states". Positives like a cooling down in CPI inflation to 4.4 per cent for February had led to speculation over RBI's rate call.

The RBI projected economic growth of 7.4 percent for the current fiscal year that began on April 1, sharply higher than its projected 6.6 percent for the last fiscal year that ended in March, saying "several factors are expected to accelerate the pace of activity".

"The MPC made a decision to keep the policy repo rate on hold and continue with the neutral stance. Recent volatility in crude prices has imparted considerable uncertainty to the near-term outlook", Patel said.

The central bank, meanwhile, has constituted an inter-departmental group to study the feasibility of a digital currency backed by the RBI.

Amid the ongoing fears of Trade war, Softening inflation and kick off to government borrowing, that is being offloaded, RBI Kept the repo rates unchanged and keeping its stance very clear which is focused on Containing the inflation and improving the overall growth.

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