RBI releases bi-monthly policy: Repo rate unchanged

On February 6, 2020, the Reserve Bank of India released its bi-monthly monetary policy. The apex bank has kept the policy repo rate unchanged. It remains at 5.15%.

Observations of the Committee

The Monetary Policy Committee that meets once in two months under the chairmanship of its Governor has made the following observations

  • The inflation has increased and the unusual price hike in onions has been the main reason behind price rise. The Retail Inflation has increased from 4.6% in October to 5.5% in November. It increased further to 7.4% in December 2019. It is the highest since July 2014.
  • The Committee estimates CPI for Q4 of the Financial Year 2020 at 6.5%. For Q3, it was at 3.2%.
  • The Reverse Repo Rate under the Liquidity Adjustment Facility remained unchanged at 4.9%
  • The Bank Rate and the Marginal Standing Facility Rate stood at 5.4%

Economic Slowdown

According to RBI, the economic slow down is mainly due to muted corporate investments, weak household spending and slowdown in construction and manufacturing activity.

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