The Reserve Bank of India (RBI) on Thursday kept key lending rates intact at the end of its two-day Monetary Policy Committee (MPC) meeting. The decision means that repo rate – interest rate at which the RBI lends money on short term to commercial banks – will stay at the existing 6 per cent. This is for the fourth straight occasion that the central bank has maintained status quo in key interest rates.
Despite maintaining a ‘neutral’ stance, the central bank has turned bullish and the policy has a ‘dovish’ tone as it lowered inflation projection in the fiscal year 2018-19. Retail inflation, which was projected in the range of 5.1 to 5.6 per cent in the first half of FY19, has now been moderated to the range of 4.7 to 5.1 per cent. The range for second half has also been lowered to 4.4 per cent.
However, while briefing the media, RBI Governor Urjit Patel listed financial market volatility and trade war fear as risks.