Repo Rate Remains Unchanged at 6 Percent by the RBI
Jun 12, 2018 Home Loan
As expected and for the third time in a row, the Reserve Bank of India (RBI) has kept the repo rate unchanged at 6 percent in its sixth bi-monthly policy review. Repo rate is the rate at which the central bank lends money to the scheduled banks and financial institutions in the country. In its December review also, the apex body kept the repo rate unchanged. Last year in August, the RBI had cut the repo rate by 0.25 percent points to 6 percent, bringing it down to six year low. Moreover, the RBI has not made any changes in the reverse repo rate (5.75 percent), the marginal standing facility (MSF) rate and the bank rate (6.25 percent).
For this term, experts were already in view that this time also the central bank will keep the repo rate as it is. The RBI stated in its sixth bi-monthly monetary policy review statement that, "The economy is on a recovery path, including early signs of a revival of investment activity. The committee is of the view that the nascent recovery needs to be carefully nurtured and growth put on a sustainably higher path through conducive and stable macro-financial management."
The statement further added that “The focus of the Union Budget on the rural and infrastructure sectors is also a welcome development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activity.”
The central bank said on February 7 that the inflation might get hard to 5.1 percent in the fourth quarter of 2017-18 and further in the first half of the next financial year to 5.1 to 5.6 percent that might make the reduction of the rate unlikely to get reduce in future also.
The apex body expects the growth to pick up and reach 7.2 percent in the next financial year.
The next meeting is scheduled for April 4 and 5. Experts are expecting that the central bank might go for a rate change this time, as the economic activity in the second half of the present financial year might pick up which in return is expected to decrease the pressure on the RBI to go for a rate cut in order to boost growth.
For this term, experts were already in view that this time also the central bank will keep the repo rate as it is. The RBI stated in its sixth bi-monthly monetary policy review statement that, "The economy is on a recovery path, including early signs of a revival of investment activity. The committee is of the view that the nascent recovery needs to be carefully nurtured and growth put on a sustainably higher path through conducive and stable macro-financial management."
The statement further added that “The focus of the Union Budget on the rural and infrastructure sectors is also a welcome development as it would support rural incomes and investment, and in turn provide a further push to aggregate demand and economic activity.”
The central bank said on February 7 that the inflation might get hard to 5.1 percent in the fourth quarter of 2017-18 and further in the first half of the next financial year to 5.1 to 5.6 percent that might make the reduction of the rate unlikely to get reduce in future also.
The apex body expects the growth to pick up and reach 7.2 percent in the next financial year.
The next meeting is scheduled for April 4 and 5. Experts are expecting that the central bank might go for a rate change this time, as the economic activity in the second half of the present financial year might pick up which in return is expected to decrease the pressure on the RBI to go for a rate cut in order to boost growth.
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