Reserve Bank Keeps Policy Rates Unchanged | CORPORATE ETHOS

Reserve Bank Keeps Policy Rates Unchanged

By: | December 6, 2017
RBI

December 6: The Reserve Bank of India (RBI) has kept the key policy rates unchanged in the monetary policy statement issued on Wednesday. The repo rate has been kept unchanged at 6% and reverse repo rate remains at 5.75% while bank rate remains at 6.25%.

The decision is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

On the macro economic front, growth of real gross value added (GVA) accelerated sequentially in `s Q2 of 2017-18, after five consecutive quarters of deceleration. Manufacturing, mining, electricity and gas supply also strengthened on higher demand. Services sector decelerated on account of slow down in financial, insurance, real estate and professional services.

Despite some improvement, construction sector growth remained tepid due to transitory effects of the RERA and GST implementation. Growth in the trade, hotels, transport and communication sub-group remained resilient, in spite of some slowdown in growth in Q2 as compared with the previous quarter. On the expenditure side, the growth of gross fixed capital formation improved for the second successive quarter. However, growth in private final consumption expenditure – the mainstay of aggregate demand – slowed to an eight-quarter low in Q2, RBI Monetary Review noted.

RBI has noted that buoyancy in capital market with new public issues, improvement in ease of doing business and the implementation of insolvency and bankruptcy code and recaptilisation of banks augur well for the growth of the economy.