RBI monetary policy: Reserve Bank keeps repo rate unchanged at 6.5%

The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 6.50 per cent in its bi-monthly monetary policy. The RBI maintained its stance of ‘calibrated tightening’ of the policy. The repo rate and the reverse repo rate remained unchanged at 6.50 per cent and the bank rates at 6.75 per cent. This was the second time in a row that the central bank maintained the status quo with the interest rate.

“The decision of the Monetary Policy Committee is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/-2 per cent, while supporting growth,” the central bank said.

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The Gross Domestic Production (GDP) was projected to grow at the rate of 7.4 per cent in 2019-20 while the inflation is projected to remain between 2.7 and 3.2 per cent in the second half of 2018-19.

Meanwhile, in view of the increase in digital transactions, the RBI has decided on the implementation of an ombudsman for digital transactions, this will be notified by the end of January 2019.

Following the central bank's monetary policy outcome, the benchmark Sensex plunged over 300 points, with most indices trading in the red. The NIFTY also plunged over 90 points even as the RBI kept key lending rates unchanged. However, the market recovered by over 50 points in the closing trends.