Heena Sharma Blog

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) on Thursday kept the repo rate unchanged at 5.15 per cent — a 10-year low in its last policy review of the financial year 2019-20 (FY20). Consequently, the reverse repo rate stands unchanged at 4.90 per cent. Further, the bank said it will maintain 'accommodative' policy stance as long as it takes. The committee voted 6-0 in favour of the status quo of the interest rates. GDP growth forecast for the financial year 2020-21 (FY21) is projected at 6 per cent and in the range of 5.5-6.0 per cent in the first half of the next fiscal. while real GDP growth for 2019-20 was projected in the December 2019 policy at 5.0 per cent – 4.9-5.5 per cent in H2. In its last policy meet, the central bank had maintained the repo rate at 5.15 per cent points (bps). However, GDP growth forecast for FY20 was slashed to 5 per cent from 6.1 per cent. Read More

It was widely expected that the Reserve Bank of India (RBI) would cut interest rates on Friday for two reasons. The first is that by now it has become a habit where low growth tendencies, which have taken precedence over the original goal of inflation targeting gets thumbs-up for a rate cut. The second is that over the last month or so, the government has announced various steps to revive the economy with the last measure being the corporate tax cut. A rate cut after all these announcements appeared to be a foregone decision. The point of interest, however, was the quantum of the cut. The last time the Governor went in for 35 basis point (bps) cut, which was non-conventional and had popped up the choice between 25 bps and something more this time around. The RBI has settled for 25 bps this time. Given that the 110 bps rate cut so far has not quite led to the uptick in investment, one can look upon the series of rate cuts as being work in progress to lower the cost of capital ...

As expected, the six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) unanimously voted to lower the repo rate by 0.25 per cent in its three-day monetary policy meet, which ended on Thursday. The repo rate that stands at 5.75 per cent post the Thursday’s review is the lowest in nine years. This is the first time in 2019 when all members of the MPC (Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Viral V. Acharya and Shri Shaktikanta Das) unanimously decided to reduce the policy repo rate by 25 basis and change the stance of monetary policy from neutral to accommodative. Accommodative stance indicates that the rate increase is off the table, said RBI Governor Shaktikanta Das. “ The RBI policy announcement is exactly on the same lines as expected by most of the market participants. The repo rate cut of 0.25 % and the change of stance from neutral to accommodative is key to supporting the sagging economic grow...