RBI keeps repo rate unchanged at 6.50 per cent

NEW DELHI: The Reserve Bank of India (RBI) maintained a established order and kept the repo rate unchanged at 6.50 according to cent, following its October monetary coverage meet.

The RBI however modified its stance from 'neutral' to 'calibrated tightening', revising its retail inflation projection at the upside. "The changed stance indicates that in the current rate cycle RBI has only two options- hike rates in the next policy meeting or keep it unchanged. A neutral stance indicated a chance of rate cut too," RBI governor Urjit Patel stated.

Not targeting any specific rupee level, says RBI

"The RBI's response to these unsettled conditions has been to ensure the foreign exchange market remains liquid with no undue volatility," the central financial institution's governor, Urjit Patel, stated after monetary coverage assembly.

The repo rate + is the velocity at which the RBI lends short-term cash to the banks.

Reverse repo rate -- the velocity at which the RBI borrows cash from business banks -- too has been kept the similar as the present rate of 6.25 according to cent.

"The decision of the MPC is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth," RBI stated in a statement.

The central financial institution's move got here in opposition to the Street expectations as many of the professionals had predicted a 25 foundation issues (bps) rate hike because of a weakening rupee and inflationary pressure because of top crude oil prices.

Rupee @73: RBI likely to flip hawkish to stem the slide

Amid the rout in rupee, the RBI begins its three- day assembly on bi-monthly monetary coverage on Wednesday. The Street is expecting from the central financial institution a third back-to-back repo rate hike as inflation is expected to boost up further because of higher crude prices and the weak spot in rupee.

Despite keeping up the lending rates at current ranges, RBI flagged a couple of risk factors. "Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook," the RBI stated in its coverage statement, including this is used to be necessary "to further strengthen domestic macroeconomic fundamentals."

Read additionally: Repo rate: Tracking the trade during UPA and NDA regime

RBI retained the gross domestic product (GDP) expansion rate estimate at 7.4 according to cent for this fiscal yr and stated it is going to to move up to 7.6 according to cent in the subsequent financial yr.

Meanwhile the rupee plunged to a brand new low of 74.15 in opposition to US greenback in Friday's mid-day trading.

RBI keeps repo rate unchanged at 6.50 per cent RBI keeps repo rate unchanged at 6.50 per cent Reviewed by kailash soni on October 06, 2018 Rating: 5
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