06 June :- A three-day meeting of the monetary policy committee (MPC) of the Reserve Bank ended today. After this meeting, the RBI has increased the repo rate from 0.25 basis points. Now it is 6.25 percent. RBI has increased the reverse repo rate by 0.25 percent. Now it is decided that all the loans will be expensive by this. There will be some impact of the cost of loans in the economy. For the first time since January 2014, the RBI has done this. That is, for the first time in the last four, RBI has increased interest rates. Giving information to the media, RBI Governor Urjit Patel said, the Reserve Bank has increased the policy rate (repo rate) by 0.25 percent to 6.25 percent. RBI revised retail inflation estimates for the first half of 2018-19, 4.8-4.9 percent and 4.7 percent for the second half. The Reserve Bank retained the GDP growth rate for the year 2018-19 at 7.4 percent.
The interest rate cut cycle began in January 2015, on which the RBI (Reserve Bank of India) has raised key interest rates by 25 basis points on Wednesday, after which the repo rate has increased to 6.25 percent. . RBI said, “As a result, under the Liquidity Adjustment Facility (LAF), the reverse repo rate is 6.00 per cent and the marginal standing facility (MSF) rate and the bank rate are 6.50 per cent.”
Reserve Bank of India (RBI) hikes Repo Rate by 25 bps to 6.25%. Reverse Repo rate at 6.50% pic.twitter.com/7CYtcWDQrx
— ANI (@ANI) June 6, 2018
With the rise in the price of crude oil in the global market, the Reserve Bank today raised its earlier estimates of inflation in the current financial year marginally. In a statement issued after the three-day meeting of the Monetary Policy Committee, the Reserve Bank has said that the Consumer Price Index (CPI) -led retail inflation has risen sharply to 4.6 percent in April. During this, there was a greater contribution to the rapid growth of food, except for fuel, in other groups.
After the meeting of the Monetary Policy Committee (MPC) in April, the price of Indian basket of crude oil rose by 66 dollars to 74 dollars per barrel in the international market. It recorded about 12 percent growth. With the increase in prices of second consumer commodities in the global market, the incidence of recent global financial markets increased cost pressures in the case of various products.
Keeping in mind the various developments, the Reserve Bank revised retail inflation estimates for the first half of 2018-19, to 4.8- 4.9 per cent and 4.7 per cent for the next period. This includes the impact of increased housing allowance for the Central Government employees. At the same time, it has been told to increase risk. In the previous monetary review, the Reserve Bank had estimated 4.4 percent for 4.7-5.1 percent for the first half and 4.4 percent for the second half, including the impact of housing rent allowance of government employees.
The Reserve Bank has further said that it is not possible to assess the effect of the revision of the minimum support price (MSP) of Kharif crops at this time, as the suitable details are not available. Simultaneously, the bank has said that if monsoon remains normal and its distribution is good throughout the country, then it can remain at favorable level in food inflation. The price of crude oil has been quite high, and there is a lot of uncertainty in the inflation scenario. This uncertainty has made it both increasing and declining.
The RBI said in the statement, “The decision of Monetary Policy Committee is in line with the neutral stance of monetary policy, which aims at achieving the target of four per cent inflation (two per cent above-below) for the medium term of the Consumer Price Index (CPI).”
Before the meeting, the experts were saying that the findings of the meeting could have an impact on the speed of petroleum products. The MPC meeting was released from June 4 and today the discussion ends. The Reserve Bank had said in a statement that the meeting of the MPC will be held on June 4-6 for the second bi-monthly monetary policy review of 2018-19.
Explain that this is the first time that the meeting of Monetary Policy Committee due to administrative needs lasted three days. In the general situation, there was a meeting for two days in two months before the committee monetary policy announcement.
Retail inflation has been noticed in the monetary policy review, which reached a high of 3.18 percent for four months in April. It is believed that the rise in the price of petrol and diesel has increased.
Due to the increase in crude oil prices in the international market, prices of petrol and diesel have risen in the domestic market, which are now running below the last seven days. High prices of petrol and diesel also led to an increase in inflation.