In a major policy shift, the six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das on Thursday lower the repo rate by 25 basis points to 6.25 per cent in 4-2 vote. RBI has thus cut rate for the fi rst time in 17 months. The last rate cut happened in August, 2017.
The MPC also changed the policy stance to ‘neutral’ from ‘calibrated tightening’. This was first money policy review for former economic affairs secretary Shaktikanta Das, who took over as RBI Governor in the second week of December, 2018.
RBI MONEY POLICY HIGHLIGHTS
- RBI Governor Das voted in favour of rate cut
- MPC unanimously voted to change stance to neutral
- FY20 GDP seen at 7.4 per cent
- CPI seen at 2.4% in Jan-March 2019 and 3.2-3.4% in April-Sept
- RBI to withdraw rule on FPI exposure to single corporate entity
- To raise limit for collateral free farm loan to Rs 1.6 lakh
- FY20 Budget proposals likely to boost aggregate demand
- Risk weight on bank exposure to NBFCs linked to ratings
The central bank sees consumer price inflation at 2.4 in January-March period and 3.2-3.4 per cent from April to September.
April-September GDP growth is seen at 7.2-7.4 per cent.
Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook. Beyond the near term, some uncertainties warrant careful monitoring, RBI said.
“GDP growth for 2019-20 is projected at 7.4 per cent – in the range of 7.2-7.4 per cent in H1, and 7.5 per cent in Q3 – with risks evenly balanced,” the central bank said in the policy statement.
Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Das and three others voted for a cut in interest rates.