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RBI maintains repo rate at 5.15%. These are the highlights from the MPC meeting

RBI maintains repo rate at 5.15%. These are the highlights from the MPC meeting

RBI maintains repo rate at 5.15%. These are the highlights from the MPC meeting
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By CNBC-TV18 Dec 5, 2019 1:28:15 PM IST (Updated)

The Reserve Bank of India in its last bi-monthly monetary policy committee (MPC) meeting on Thursday has maintained the key repo rate at 5.15 percent while keeping its policy stance as "accommodative."

The Reserve Bank of India in its last bi-monthly monetary policy committee (MPC) meeting meeting of the year on Thursday has maintained the key repo rate at 5.15 percent while keeping its policy stance as "accommodative." The RBI's decision comes against the wider expectation of a rate cut. The current 5.15 percent rate is the lowest in nine years. The MPC was led by the RBI governor Shaktikanta Das and all six members voted in favour of the decision.

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Indian economy has been undergoing a slowdown with the second quarter gross domestic product (GDP) growth coming in at 4.5 percent, the lowest in six years, raising hopes for a rate cut in a bid to spur growth but it didn't come.
These are the highlights from the RBI MPC:
RBI leaves repo rate unchanged at 5.15 percent
MPC maintains policy stance at “accommodative”
FY20 GDP growth forecast cut sharply to 5 percent from 6.1 percent projected earlier
2H FY20 GDP growth seen at 4.9-5.5 percent versus 6.6-7.2 percent projected earlier
1H FY21 GDP growth seen at 5.9-6.3 percent
CPI forecast for 2H FY20 revised to 5.1-4.7 percent from 3.5-3.7 percent earlier
CPI forecast for 1H FY21 at 4.0-3.8 percent with risk evenly balanced
MPC recognises that there is monetary policy space for future action
All six MPC members voted in favour of the decision
MPC on growth
High frequency indicators suggest domestic, external demand conditions remained weak
RBI’s business expectations index survey indicates marginal pickup in business sentiments in Q4
Monetary easing since Feb, govt measures expected to revive sentiment and spur domestic demand
Improved monetary transmission, quick resolution of global trade tensions possible upsides to growth projections
Delay in revival of domestic demand, further slowdown in global economic activity, geo-political tensions downside risks
 MPC on inflation
Upsurge in vegetable prices likely to continue in immediate months
Pick-up in arrivals from late kharif season, govt measures should help soften vegetables prices by Feb 2020
Incipient price pressures seen in other food items such as milk, pulses, and sugar likely to be sustained
Both three-month and one-year ahead inflation expectations of households have
Domestic financial markets have exhibited volatility
Domestic demand has slowed down, reflected in the softening of inflation excluding food and fuel
Crude oil prices expected to remain range bound, barring any supply disruptions due to geopolitical tensions
MPC on economic outlook
Economic activity has weakened further, output gap remains negative
Data on corporate finance, projects sanctioned suggest early signs of recovery in investment activity
Sustainability of early investment activity needs to be watched closely
Addressing impediments which are holding back investments needed
Introduction of external benchmarks expected to strengthen monetary transmission
Need for greater flexibility in adjustment in interest rates on small saving schemes
Inflation likely to moderate below target by Q2 FY21
Prudent to carefully monitor incoming data to gain clarity on the inflation outlook
Statement on developmental and regulatory policies (Non policy)
Proposed to amend exposure norms regulatory guidelines relating to UCBs (urban co-operative banks)
UCBs with assets of Rs 500 crore and above to be brought under the CRILC reporting framework
RBI to prescribe a comprehensive cyber security framework for the UCBs
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