The Reserve Bank of India on Wednesday left the repo rate and the reverse repo rate unchanged at 6 per cent and 5.75 per cent, respectively. In its fourth bi-monthly monetary policy review for 2017-18, five of six Monetary Policy Committee (MPC) members voted for retaining the policy rates. The cash reserve ratio (CRR) too was left unchanged at 4 per cent. The primary reason behind no change in the policy rates reflects the Reserve Bank of India's focus on inflation control, and its analysis of India's strong economic prospects. Here are some key takeaways from the monetary policy statement.
Inflation to remain between 4.2-4.6 per cent
The October bi-monthly statement projected that the inflation -already at a seven-month high - will rise and range between 4.2-4.6 per cent in the second half of this year. The inflation path will be influenced by several factors, including the impact of increase in house rent allowance (HRA) by the Centre, and there's is a risk that this upward trajectory may continue in the near-term, said the RBI. The retail inflation measured by year-on-year change in the consumer price index (CPI) recorded a seven-month high in October. The food inflation declined sharply in September but bounced back in October due to vegetables and fruits price rise. The RBI said the farm loan waivers, partial roll back of excise duty, and Goods and Services Tax rate cuts may also affect inflation.
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