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DAINIK NATION BUREAU
The RBI Governor Urjit Patel-led monetary policy committee (MPC) on Thursday maintained status quo on the short-term lending rate — repo rate — at 6 per cent, in its first bi-monthly policy review of 2018-19. Five of six members voted in favour of the decision.
Reverse repo was kept unchanged at 5.75 per cent. No changes were made to cash reserve ratio (CRR) and statutory liquidity ratio (SLR), which stand at 4 per cent and 19.5 per cent, respectively.
Chetan Ghate, Pami Dua, Ravindra H. Dholakia, Viral V. Acharya and Urjit R. Patel voted in favour of the monetary policy decision. However, Michael Debabrata Patra voted for an increase in the policy rate of 25 basis points, the RBI said in a release.
“With the sharp moderation in food prices in February-March, the inflation trajectory in H1:2018-19 is expected to be lower than the projection in the February statement, despite a likely reversal in food prices in H1,” the statement added.
The six-member committee kept its policy stance ‘neutral’ and suggested upside risks to inflation in the near future.
The RBI revised CPI inflation projection for 2018-19 to 4.7-5.1 per cent in the first half of the financial year and 4.4 per cent in the second half, including the HRA impact for central government employees, with risks tilted to the upside.
Data on inflation has been positive of late, with wholesale inflation (WPI) easing to a seven-month low of 2.48 per cent and Consumer Price Index (CPI) figure sliding to 4.44 per cent in February from 5.1 per cent in the previous month. Bank of America Merrill Lynch (BofAML) sees March CPI print at 4.2 per cent and believes that inflation risks are proving overdone.
