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In a surprise move, RBI keeps policy rates unchanged

In a surprise move, RBI keeps policy rates unchanged

Oct 05, 2018
06:00 pm

What's the story

The Reserve Bank opted for a surprising status quo at the bi-monthly review today on expectations of softening price rise, but changed the policy stance to "calibrated tightening" from "neutral". The repo rate, at which the RBI lends to the system, will continue to be at 6.5% and the reverse repo at which it absorbs excess funds will be 6.25%. Here's more.

Prediction

Analysts, bankers expected at least 0.25% hike in rates

A majority of the analysts and bankers were expecting the six-member Monetary Policy Committee (MPC) to go at least for a 0.25% hike in key rates at the review. "The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4% on a durable basis," the resolution of the MPC after a three-day meet said.

Data

Excise duty cut on petrol, diesel will contain inflation: RBI

The MPC voted 5:1 in favor of a status quo, with only Chetan Ghate voting for a 0.25% hike. The MPC headed by RBI Governor Urjit Patel said that the recent excise duty cut by the government on petrol and diesel will help contain inflation.