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6 December 2017
 |
| RBI Governor Urjit Patel (The Total Investment & Insurance Solutions) |
Deterred
by inflationary concerns, the Reserve Bank on Wednesday kept the policy rate
unchanged leaving little scope for banks to lower interest rates on housing and
auto loans.
It
raised the inflation estimate to 4.3-4.7 percent, from the earlier projection
of 4.2-4.6 percent, for the second half of the current financial year. The
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However
it retained the growth forecast at 6.7 percent for 2017-18 even through the
gross value added (GVA) in the second quarter rose to 6.3 percent. The
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The
6-member Monetary Policy Committee (MPC), headed by Reserve Bank of India (RBI)
Governor Urjit Patel, in its 5th bi-monthly review in the current fiscal, kept
repo rate unchanged at 6 percent and reverse repo at 5.75 percent. The
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It
said the reason for the decision was "achieving the medium-term target for
consumer price index (CPI) inflation of 4 percent within a band of +/- 2
percent, while supporting growth".
RBI
factored in the Housing Rent Allowance (HRA) effect of up to 35 basis points,
with risks evenly balanced, following the implementation of the 7th Pay
Commission recommendations for central government employees. The
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The
impact of HRA is expected to peak in December. However, the staggered impact of
HRA increases by various state governments may push up housing inflation
further in 2018, it said.
Expecting
price situation to harden, it said: "The moderation in inflation excluding
food and fuel observed in Q1 of 2017-18 has, by and large, reversed. There is a
risk that this upward trajectory may continue in the near-term."
The
recent rise in international crude oil prices may sustain, especially on
account of the OPEC's decision to maintain production cuts through next year,
it said. The Total Investment & Insurance Solutions
It
further said that the implementation of farm loan waivers by select states,
partial roll back of excise duty and VAT in the case of petroleum products, and
decrease in revenue on account of reduction in Goods and Services Tax rates for
several goods and services may result in fiscal slippage with attendant
implications for inflation.
Of
the six, one member, Ravindra H Dholakia, voted for a policy rate reduction of
25 basis points.
The
MPC decided to continue with the neutral stance and watch the incoming data
carefully. The next meeting of the MPC is scheduled on February 6 and 7. The
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The
MPC remains committed to keeping headline inflation close to 4 per cent on a
durable basis. The Total Investment & Insurance
Solutions
Although
the RBI status quo on the key rate was on expected lines, the BSE Sensex closed
205.26 points or 0.63 percent down at 32,597.18.The Total Investment & Insurance Solutions
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