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Friday, 29 March 2024
Thursday, 06 Feb 2020 02:00 pm

RBI holds Rates Steady, seeks to balance growth & Inflation risks

The RBI cut its policy rate by 135 basis points over five straight meetings last year, before surprising markets in December by holding rates steady due to growing concerns over inflation.

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The Reserve Bank of India (RBI) held rates steady on Thursday and retained an accommodative policy stance as it sought to support faltering growth and avoid stoking already high inflation levels.

The central bank has its work cut out as the economy is forecast to grow 5% in the year ending in March, its weakest pace in 11 years. A rapidly-spreading coronavirus outbreak in China has also heightened concerns around the world of a damaging blow to global growth.

Economists polled by Reuters had expected the RBI’s Monetary Policy Committee (MPC) to leave its key repo rate unchanged at 5.15% and reverse repo rate at 4.9%.

All six members of the MPC voted to keep rates steady and retain the accommodative monetary policy stance.

The RBI cut its policy rate by 135 basis points over five straight meetings last year, before surprising markets in December by holding rates steady due to growing concerns over inflation.

On Thursday, the central bank said it expects inflation in the ongoing fourth quarter of fiscal 2020 to hit 6.5%. In December it had forecast that inflation would be in the 5.1%-4.7% range during the second half of the current fiscal year.

It also forecast inflation be in the 5.4%-5% range in the first half of the upcoming fiscal year, as compared to its own prior projection of 4%-3.8% for that period.

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Neha Pandey

Aware of her elements, Neha writes the best articles across industries including electronics & semiconductors, automotive & transportation and food & beverages. Being from the finance background she has the ability to understand the dynamics of every industry and analyze the news updates to form insightful articles. Neha is an energetic person interested in music, travel, and entertainment. Since past 5 years, she written extensively on sectors like technology, finance and healthcare.


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