RBI’s 6th bi-monthly monetary policy statement for 2018-19

The six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, announced the sixth bi-monthly monetary policy statement for 2018-19. In it, the RBI has cut the key policy rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25% from 6.5% with immediate effect. Consequently, the reverse repo rate stands adjusted to 6.0%, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 6.5%. The MPC also decided to change the monetary policy stance from calibrated tightening to neutral. These decisions are 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 bank also projected an economic growth rate of 7.4% for FY20, up from 7.2% estimated for the current fiscal by Central Statistics Office (CSO). This is the first policy review, post the appointment of RBI Governor Shaktikanta Das and also the first post the interim budget. The next meeting of the MPC is scheduled from April 2 to 4, 2019.