New Delhi, Dec 6: The Reserve Bank of India (RBI) has kept key policy rates unchanged as it announced the monetary policy on Wednesday. The Monetary Policy Committee (MPC) has left the repo rate unchanged at 6%. There has not been any change in reverse repo rate and the cash reserve ratio. The RBI kept its growth forecast for the current fiscal year ending March 31 unchanged at 6.7%.
As was expected, MPC took the decision keeping in mind the surging food and energy prices. Inflation and an improvement in GDP Growth were the other reasons for keeping the rates unchanged. (Also Read: Wholesale Inflation Touches 6-Month High, at 3.59% in October 2017)
“On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0 per cent,” RBI said in policy statement.
“Consequently, the reverse repo rate under the LAF remains at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent,” it added.
“The decision of the MPC is consistent with a neutral stance 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,” it said further. (Also Read: WPI inflation eases to 2.6 pct in September 2017)
The statement issued by the RBI added that food inflation remained volatile in the last two months – declining sharply in September and bouncing back in October – due mainly to vegetables and fruits. “Milk and eggs inflation has shown an uptick, while pulses inflation remained negative for the eleventh successive month in October. Cereal inflation remained stable,” the statement said.
“Fuel group inflation, which has been on an upward trajectory since July, accelerated further due to a sharp pick-up in inflation in liquefied petroleum gas (LPG), kerosene, coke and electricity,” it added.
Meanwhile, market benchmark Sensex fell 218 points to quote at 32,584.66 in late afternoon trade soon after the RBI’s announcement of no change in key lending rate. The Sensex, which had lost 100 points in early trade, continued its slide and fell 217.78 points, or 0.66 per cent, to 32,584.66. Similarly, the NSE Nifty was trading lower by 78.70 points, or 0.77 per cent, at 10,039.55.