RBI keeps repo rate constant at 6.5%, projects GDP growth rate for 2018-’19 at 7.4%
The central bank predicted that the growth rate for the October-March period will be 7.2-7.3%.
The Reserve Bank of India on Wednesday kept the repo rate, or the interest rate at which it lends to commercial banks, constant at 6.5%. The decision to maintain the repo rate was taken by the central bank’s monetary policy meeting after three days of talks, Mint reported.
The RBI kept the reverse repo rate unchanged at 6.25%, and the bank rate at 6.75%. The reverse repo rate is the rate at which the central bank borrows money from commercial banks. The bank rate is rate of interest the RBI charges on its loans and advances to commercial banks.
The central bank also predicted that retail inflation will stand at 2.7% to 3.2% in the second half of the 2018-’19 financial year, which ends in March 2019. Consumer price inflation had declined to 3.31% in October, which the RBI said was lower than expected. Meanwhile, crude oil prices have been falling in the global market, and the rupee has gained against the United States dollar over the past month.
The central bank predicted that the Gross Domestic Product growth rate for the second half of the financial year will be 7.2% to 7.3%. It said that the growth rate from April to September 2019 will be around 7.5%.
The RBI also announced that an ombudsman scheme will be created for digital transactions, given the increasing number of such transactions in the economy. The central bank will notify the scheme by the end of January 2019.
Indian markets traded lower on Tuesday ahead of the conclusion of the RBI meeting, due to investor caution. The Indian rupee also depreciated against the dollar.
Addressing a press conference after the release of the monetary policy, RBI Governor Urjit Patel refused to answer questions about the central bank’s spat with the government. “I would avoid those questions because we are here discussing the monetary policy resolution,” he said, according to PTI.