The Monetary Policy Committee (MPC), led by Reserve Bank of India Governor Urjit Patel, decided to cut the repo rate, or key lending rate, by 25 basis points to a seven-year low of 6 per cent on Wednesday. The repo rate slash shall make the loans cheaper for the consumers.
The decision to cut repo rate by 25 bps was not unanimous at the monetary policy committee. 4 members of MPC voted in favour of 25 bps, 1 in favour of 50 bps, 1 for status quo.
Here are the live updates of the RBI Monetary policy review -
# Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity.
# Speedier clearance for projects key to boost private investment
The monetary policy committee routes for speedier clearance of projects to boost private investment.
"The MPC is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. This hinges on speedier clearance of projects by the States," the RBI statement said.
# The central bank has maintained the GVA forecast for the current financial year at 7.3 percent. It also maintains neutral policy stance with focus on 4 percent for CPI.
# In June, retail inflation measured by year-on-year changes in the CPI plunged to its lowest reading in the series based to 2011-12. This was mainly the outcome of large favourable base effects which are slated to dissipate and reverse from August.
# Prices of food and beverages, which went into deflation in May 2017 for the first time in the new CPI series, sank further in June as prices of pulses, vegetables, spices and eggs recorded year-on-year declines and inflation moderated across most other sub-groups.
#Policy repo rate under liquidity adjustment facility (LAF) reduced by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect: RBI
#Reverse repo rate under LAF stands adjusted to 5.75 %, and the marginal standing facility (MSF) rate and Bank Rate to 6.25 %: RBI
#RBI is likely to keep CRR unchanged at 4 per cent.