RBI has released 6th Bi-Monthly Monetary Policy Statement. On the basis of an assessment of the current and evolving macroeconomic situation at its meeting, the Monetary Policy Committee (MPC) decided to:
- Reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5% to 6.25% with immediate effect.
- Consequently, the reverse repo rate under the LAF stands adjusted to 6.0%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5%.
- On the supply side, the FAE has placed the growth of real gross value added (GVA) at 7.0% in 2018-19 as compared with 6.9% in 2017-18.
The MPC also decided to change the monetary policy stance from calibrated tightening to neutral. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth.
- Retail inflation declined from 3.4% in October 2018 to 2.2% in December, the lowest print in the last eighteen months.
- Inflation in the fuel and light group fell from 8.5% in October to 4.5% in December.
- CPI inflation excluding food and fuel decelerated to 5.6% in December from 6.2% in October.