RBI Keeps Repo Rate Unchanged at 6.50%
The Reserve Bank of India (RBI) in a surprising move, kept the repo rate unchanged at 6.50 per cent in its monetary policy on Friday.
Mumbai, October 5: The Reserve Bank of India (RBI) in a surprising move, kept the repo rate unchanged at 6.50 per cent in its monetary policy on Friday. The six-member monetary policy committee (MPC) has announced the fourth bi-monthly policy statement for FY19 amid concerns of rising inflation, falling current account deficit, depreciating rupee and liquidity crisis gripping the financial markets. The Monetary Policy Committee (MPC) voted 5:1 in favour of a status quo, with only Chetan Ghate voting for a 0.25 per cent hike.
The policy had a negative impact on currency with the Indian Rupee falling to 74 per US dollar for the first time ever. The Sensex was trading at 34,733 points and Nifty at 10,398 at the time of policy announcement.
“The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis,” the resolution of the MPC after a three-day meet said. It also kept the GDP outlook unchanged at 7.4 per cent in 2018-19 and 7.5 per cent in 2019-20.
There was an expectation that MPC will hike the key policy repo rate by 25 basis points (bps, 0.25 percentage point) after a three-day meeting. Experts had predicted that RBI will hike the key interest rates for the third time since June to combat inflation. US Fed had further tightened the monetary policy and raised interest rate by 25 bps to a range of 2.00 percent to 2.25 percent. There is another rate hike expected from US central bank by end of December 2018.
Goldman Sachs and Citigroup have downgraded the stocks of state-run fuel retailers after the government on Thursday asked them to reduce retail petrol and diesel prices.
Finance Minister Arun Jaitley had on Thursday announced that petrol and diesel prices will be cut by Rs 2.50 per litre with immediate effect. He said that while the Centre has cut excise duty on petrol and diesel by Rs 1.50 per litre, the Oil Marketing Companies (OMCs) will further reduce prices by Re 1 per litre. Reportedly, just after the announcement, the refiners’ stocks slumped. The S&P BSE Energy Index tumbled 6.7 percent, the most since August 2015, while each of the three state-run refiners closed more than 10 percent lower on Thursday.
(The above story first appeared on LatestLY on Oct 05, 2018 02:34 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).