RBI keeps repo rate unchanged
Posted on: 05/Dec/2018 4:56:37 PM
In its December policy review, the Reserve Bank of India has decided to retain the same repo rate at 6.5 percent. Also, the reverse repo rate is kept the same at 6.25 percent.
What is repo rate?
For those who are not aware of repo rate, it is the rate at which banks lend short term money from the RBI. On the other hand, reverse repo rate is the reverse of it: the rate at which the RBI lends money out of commercial banks.
Furthermore, the GDP growth projection is kept unchanged at 7.4 percent for the year 2018-19. For the first half of 2019-20, the GDP is to be kept at 7.5 percent. RBI sources state that the inflation during the second half of the year will be 2.7 to 3.2 percent.
There were continuous hikes being made in June. And now, RBI has decided to retain the interest rates in October. But the markets expected a hike in rate in support of the dipping r rupee and fight against inflationary pressure out of oil rates. By changing its retail inflation projection, RBI has taken the neutral stand.
According to polls by leading players in finance niche, a steady repo rate shall be retained by the RBI. Probably, a hike in repo rate will be likely in March. Until then, the interest rates are to be on hold, say experts.
A three-day meet was held among a 6-member MPC that was headed by Urjit Patel, the RBI governor. This was held towards the 5th bi-monthly monetary policy review in the present year.
