RBI To Increase Policy Repo Rate Under LAF


New Delhi: Reserve Bank Of India on Wednesday announced its decision as Monetary Policy Committee has decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.5% Consequently, the reverse repo rate under the LAF stands adjusted to 6.25% & marginal standing facility rate & Bank Rate to 6.75%.

The six member Monetary Policy Committee (MPC) said that its decision is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent.

The MPC added that the volatility in global financial markets continues to impart uncertainty to the inflation outlook. Highlighting the inflation, the MPC projected 4.6 percent in Q2FY19, 4.8 percent in H2 of FY19 and 5 percent in Q1FY20.

The MPC also said that in case there is a fiscal slippage at the centre or state level, it could have adverse implications for market volatility, crowd out private investment and impact the outlook for inflation.

In the last policy, the RBI has projected the real Gross Domestic Product (GDP) growth in FY19 is seen at 7.4 percent as against 6.6 percent in FY18.

The apex bank said that the models suggests FY20 real GDP growth will range from 7.4 percent to 7.9 percent.

For the first time, the projection for inflation for Q1 for 2019-2020 has been given & it is placed at 5% excluding HRA impact CPI inflation at 4.4% in Q2 of this fiscal yr & 4.7%-4.8% in second half of this fiscal and 5% in first quarter in 2019-2020: RBI Governor Urijit Patel