The Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.75 percent from 6 percent and changed the stance to ‘accommodative’ from ‘neutral’. The key rate cut happened in the first bi-monthly monetary policy meet since the swearing in of the new government.
Here is what Governor Shaktikanta Das and Deputy Governors said today:
All MPC members voted in favour of a repo rate cut and change in stance.
The unanimous vote reflects the resolve of the Monetary Policy Committee (MPC) to act decisively and act in time.
National Statistical Office showed that the GDP growth for 2018-19 has been placed lower by 20 basis points at 6.8 percent relative to its February 28 estimate.
In Q4 2018-19 GDP growth decelerated sharply to 5.8 percent down from 6.6 percent in Q3 and 8.1 percent a year ago.On Domestic Economy
GDP growth forecast for the first half of this fiscal year cut to 6.4-6.7 percent from 6.8-7.1 percent.
Growth forecast for the second half of the fiscal year cut to 7.2-7.5 percent from 7.3-7.4 percent.
CPI inflation estimate increased to 3-3.1 percent from 2.9-3 percent for the first half of the fiscal year.
Country to expect normal monsoon this year.
High-frequency indicators show moderation in activity in the service sector.
Activity in the domestic manufacturing sector has grown weaker.
Growth in 8 core industries decelerated sharply in April.
Seasonally adjusted capacity utilization in the manufacturing sector slipped to 75.2 percent in the fourth quarter from 75.8 in the third quarter.
Will ensure that the present surplus liquidity situation will sustain.On Global economic situation
Inflation remains below target in several economies across the globe.
The global economy hit by US-China trade war and volatile oil prices.
Most emerging economy currencies have depreciated against US dollar.On Payment banks
More time is needed to review the performance of Payments Banks before considering the licensing of this category of banks to be put ‘on tap.On Malegam committee recommendation
We are already examining those recommendations and wherever actions are warranted on our part, we are taking those actions.On passing on rate cut benefits to Consumers
The central bank would make sure that transmission of reduced repo rate would be faster and higher.
Repo rate by 0.25 percent, the third in a row in 2019, taking the total to 0.75 per cent or 75 basis points.First Published: Jun 6, 2019 12:25 PM IST
