New Delhi: The Reserve Bank of India (RBI) on Wednesday hiked the key policy rates for first time in four years.
RBI hiked the repo rate by 25 basis points to 6.25 percent and the reverse Repo rate to 6 percent, the first increase since January 2014 and kept the stance neutral.On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the 6-member Monetary Policy Committee (MPC) decided to hike the rates with all the members voting in favour of a rate hike.
RBI in its first bi -monthly resolution of 2018- 19 in April projected CPI inflation in the range of 4.7- 5.1 percent in H1:2018- 19 and 4.4 percent in H2, including the HRA impact for central government employees with risks tilted to the upside. The 10-year benchmark bond yield rose 4 basis points to 7.87 percent after the monetary policy announcement while the rupee was at 66.97 to the dollar from 67.05 before the news.
According to the early results of the Reserve Bank’s IOS , activity in the manufacturing sector is expected to moderate marginally in Q2:2018- 19 on account of deterioration in the overall business situation and order book.The Central Bank has retained GDP growth for 2018- 19 at 7.4 percent in the April policy. “GDP growth is projected in the range of 7.5- 7.6 percent in H1 and 7.3- 7.4 percent in H2 , with risks evenly balanced,” RBI said.
Indian economy grew at 7.7 percent during January-March quarter (Q4) of financial year 20171-18 compared to 6.1 percent a year ago, driven by gains in manufacturing and consumer spending, Central Statistics Office data showed last week.
RBI has revised CPI inflation for 2018-19 to 4.8-4.9 percent in H1 and 4.7 percent in H2. Crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook both on the upside and the downside, it said.
