New Delhi: RBI Governor Shaktikanta Das-led Monetary Policy Committee on Thursday left the repo rate unchanged at 5.15 per cent, surprising many economists. The central bank, however, lowered its GDP growth forecast for the current financial year to 5 per cent from 6.1 per cent in October, while maintaining an “accommodative” policy stance. The RBI’s fifth policy statement of the current financial year comes at a time when the economy is struggling against a more than six-year low GDP expansion rate and thousands of job losses amid a slowdown across sectors.
All six members of the Monetary Policy Committee voted to maintain the repo rate at the existing level. The repo rate is the key interest rate at which the RBI lends short-term funds to commercial banks.
The status quo on repo rate came as a surprise to many economists. A poll of 70 economists by news agency Reuters had predicted that RBI would cut the repo rate by 25 basis points to 4.9 per cent.
However, some had also highlighted limited room for policy easing, considering rising inflation and reduction of 1.35 percentage point in the key lending rate so far this year.
Speaking to reporters in a press conference after the release of policy statement, Governor Shaktikanta Das said the RBI will monitor how inflation pans out before taking further policy action. “The timing of rate cuts is very important in order to optimize its impact,” he added.
Lowering its overall economic growth forecast, the RBI said the GDP expansion is expected to be in the range of 4.9-5.5 per cent in the second half of 2019-20, and 5.9-6.3 per cent in the first half of next financial year.
