The Reserve Bank of India (RBI) kept the repo rate unchanged at 5.15% on Thursday, in line with economist’s expectations, in a bid to battle against inflation. The central bank had withheld its accommodative financial policy posture as growth remains from lacking interest.
RBI Governor Shaktikanta Das had led Monetary Policy Committee, who decided to continue with a “Financial Policy Posture “as long as it is necessary to reanimate growth while guaranteeing that inflation remains within the target. He also highlighted that the basic content of our decisions is financial strength.
All 6 members of the Monetary Policy Committee voted in the appearance of maintaining the status quo on the policy. The RBI said that the economy continues to be weak and the output gap remains negative, planning to project a Gross Domestic Product (GDP) growth rate of 6%for the next financial year starting on 1st April and withholding to evaluate for the current financial year at 5%.
Assuming a normal southwest monsoon in the year 2020-21, the RBI increased its projections for consumer inflation to 6.5%in the quarter ending March 31st, after retail inflation crumbled to its highest level recorded in more than 5 years in December last year, initially propelled by higher food prices.
The RBI governor said, “Headline Inflation Had Pointed” and is likely to fall to 5.4 %, 5.1% and 4% going onwards. The RBI expects consumer inflation to come in at 5.4% – 5.0% in the 1st half of the financial year 2020-21, and 3.2% in the 3rd quarter. The central bank tracks consumer inflation or the rate of increase in consumer prices which is initially for expressing its monetary policy.