RBI Releases Fifth Bi-Monthly Policy, Repo Rate Unchanged at 6%
On December 6, 2017, Reserve Bank of India (RBI) announced Fifth Bi-Monthly Monetary Policy Statement for financial year 2017-18. This time too, the Policy Repo Rate has been kept unchanged.
Post the Fifth Bi-Monthly Monetary Policy Statement announcement, the policy rates and reserve ratios are as follows:
|Policy Repo Rate||6.00%||Unchanged – since 2nd August 2017|
|Reverse Repo Rate||5.75%||Unchanged – since 2nd August 2017|
|Marginal Standing Facility Rate||6.25%||Unchanged – since 2nd August 2017|
|Bank Rate||6.25%||Unchanged – since 2nd August 2017|
|Cash Reserve Ratio (CRR)||4.00%||Unchanged – since 9th February 2013|
|Statutory Liquidity Ratio (SLR)||19.50%||With Effect from 14th October 2017|
Highlights of RBI’s Second Bi-Monthly Monetary Policy Statement:
- Repo Rate has been kept unchanged at 6.00%. Consequently, the Reverse Repo Rate at 5.75 per cent, marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent too remains unchanged.
- The six-member RBI Monetary Policy Committee (MPC) voted 5:1 for the decision. Only Ravindra Dholakia (External Member) voted for a 0.25 percent reduction in repo rate.
- RBI has projected inflation to stay in the range of 4.3-4.7 per cent in December and March quarters.
- RBI has outlined that Implementation of farm loan waivers by select states, decrease in revenue on account of reduction in Goods and Services Tax (GST) rates for several items and partial roll back of excise duty and VAT in the case of petroleum products may result in fiscal slippage.
- Economic growth forecast has been retained at 6.7 per cent.
- As per Reserve Bank of India’s survey, services and infrastructure sectors are expecting an improvement in demand, financial conditions and the overall business situation in fourth quarter of FY 2017-18.
Next meeting of RBI Monetary Policy Committee is scheduled on 6th and 7th February 2018.