RBI’s Monetary Policy Statement : Key Highlights

RBI’s Monetary Policy Statement : Key Highlights

Following are the highlights of RBI’s fifth bi-monthly monetary policy statement, 2016-17


RBI’s next monetary policy statement is on 8 February. Photo: Bloomberg
Taking markets by surprise, RBI governor Urjit Patel on Wednesday kept short-term lending rate unchanged. The central bank lowered its forecast for India’s gross domestic product (GDP) growth to 7.1% for this fiscal and said demonetisation would lead to a short term disruption in economic activity. The benefits are in the medium and long term, it said.
The Patel-led six-member Monetary Policy Committee (MPC), which had in its first policy review in October cut interest rate by 0.25%, belied expectations and unanimously decided to keep the benchmark repo rate unchanged at 6.25%.
Following are the highlights of RBI’s fifth bi-monthly monetary policy statement, 2016-17:
1. The RBI keeps repo rate unchanged at 6.25%, reverse repo at 5.75%.
2. The RBI leaves cash reserve ratio (CRR) unchanged at 4% but said it will withdraw the temporary 100% hike in the CRR announced late last month in the fortnight beginning 10 December.
3. The RBI cuts growth forecast to 7.1%, from 7.6% for this fiscal.
4. The RBI keeps the inflation target at 5% for March 2017, with upside risk.
5. The RBI said demonetisation will lower the prices of perishables, could reduce inflation by 10-15 basis points by December.
6. All the six members of the RBI panel voted to hold rates. Inflation could slow by 10-15 basis points in October-December due to the cash clampdown.
7. The RBI’s monetary policy statement said demonetisation will result in short-run disruptions in cash-intensive sectors.
8. RBI says crude price volatility, surge in financial market turbulence could put March-end inflation target at risk.
9. Foreign exchange reserve rose to all-time high of $364 billion on 2 December.
10.The RBI’s next monetary policy statement is on 8 February.

Source :- LiveMint

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