December 2018
12:21 AM IST
News Headlines
Aussies will fight back, but India has upper hand: Ghavri        World Tour Finals: Tough road ahead for Sindhu; Sameer too eyes knockout berth        Govt should consider 100% FDI in multi-brand retail trade: CII report        Shaktikanta Das named new RBI Governor        Khashoggi, other journalists named Time 'Person of the Year'        May tours Europe in desperate bid to save Brexit deal        Three policemen killed in Shopian by terrorists; weapons snatched        13 of 19 Rajasthan ministers lose elections; CM Vasundhara Raje retains her seat        Clear message to Modi that People are unhappy and it is time for change: Rahul on poll results        Cong leads in R'than, Chhattisgarh and MP; TRS races ahead in Telangana, MNF in Mizoram        Shakhtar prepare for home match 700 kilometres from home        AC Milan let Inter off the hook with Torino stalemate        Sensex cracks over 550 pts; Nifty drops below 10,600        Trump's potential next chief of staff pick leaving White House        UK PM faces fight for her political life in Brexit deal        BJP mocks Oppn meet, asks them to reveal PM candidate's name        RBI Governor Urjit Patel makes loud noise with silent exit        RLSP chief Upendra Kushwaha resigns from Union council of ministers        1st Test: India in cruise control as Australia reduced to 104/4 chasing 323        Over 16000 runners take part in Pune Half Marathon        
Home   | Main News   | Kerala  | National   | International  | Business   | Sports   | Entertainment   | Columns   | Offbeat   | Health   | About Deepika 
Business News
RBI springs surprise, keeps interest rates unchanged
Mumbai, Oct 5 (PTI) After back-to-back hike since June, the Reserve Bank of India (RBI) Friday kept interest rates unchanged, surprising markets that had expected a rate hike to support tumbling rupee and combat inflationary pressures from high oil prices.

With five of its six members voting for a status quo, RBI's monetary policy committee (MPC) left repo rate at 6.50 per cent and changed policy stance to 'calibrated tightening' from 'neutral', which RBI Governor Urjit Patel said meant there would be no rate cut in the current cycle.

Vowing to keep the inflation rate under targeted 4 per cent, RBI warned that volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to growth and inflation.

A majority of the analysts and bankers had expected that RBI will raise interest rate by at least a 0.25 per cent with some even rooting for a 0.50 per cent increase in view of the developments over the last few days where rupee had continued to slide and international oil prices hit four-year high.

Soon after the monetary policy announcement, the rupee slid to a new record low, falling past the 74 to a dollar mark, before closing down 0.3 per cent to 73.7650. The domestic unit has fallen 14.5 per cent since January, making it the worst performing major Asian emerging market currency.

"Today's stance of calibrated tightening essentially means that in this rate cycle a rate cut is off the table, and that we are not bound to increase rates at every meeting," Patel told reporters here. "As new data comes in we would look into changing our policies accordingly".

Welcoming the decision of RBI to keep rates unchanged, Economic Affairs Secretary S C Garg said the government's assessment of inflation is in line with the MPC's assessment.

"We believe growth should turn out to be higher than that projected by MPC," Garg said.

The RBI forecasted GDP growth of 7.4 per cent in the current financial year ending March 31, 2019 and 7.6 per cent in the next.

"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis," the resolution of the MPC after a three-day meet said.

It projected an inflation rate of 4.8 per cent by June 2019, slightly better than the 5.0 per cent August forecast.

The repo rate, at which the RBI lends to the system, will continue to be at 6.5 per cent, the reverse repo, at which it absorbs excess funds, will be at the same level of 6.25 per cent.

The MPC voted 5:1 in favour of a status quo, with only Chetan Ghate voting for a 0.25 per cent hike.

The resolution said actual inflation outcomes have been 'below projections' as the expected seasonal increase in food prices did not materialise and inflation, excluding food and fuel, moderated.

Lowering its inflation projections from the August review, the MPC headed by RBI Governor Urjit Patel said headline inflation is expected to rise to 3.7 per cent by September quarter-end, excluding HRA impact, 3.8-4.5 per cent by the second half of the fiscal and 4.8 per cent by the first quarter of the next fiscal.

He said food inflation, a key component of the inflation basket, has been 'unusually benign' and added that the price situation will be influenced by the hike in minimum support prices, global crude prices, second round impact of the HRA allowance for government employees and currency movement.

However, the RBI warned that "global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook. It is, therefore, imperative to further strengthen domestic macroeconomic fundamentals".

Taking note of the petroleum price cut on Thursday, the MPC said that the recent excise duty cuts on petrol and diesel will moderate retail inflation.

The government announced a Rs 2.50 per litre cut in petrol and diesel prices after it reduced excise duty by Rs 1.50 a litre and asked oil companies to absorb another Re 1.

The hike in minimum support prices for the winter crop was announced by the government Wednesday.

Rising protectionist tendencies, threats of currency wars and policy normalisation in the US pose the biggest risks for domestic growth prospects, it said.

RBI's study of professional forecasters put the inflation at 4.5 per cent by March quarter and go up further to 5.1 per cent by March 2020 quarter.

A surge in oil prices to USD 88 from the present USD 86 can push the headline inflation number up by 0.20 per cent and dent growth by 0.15 per cent, it said.

The RBI has hiked rates twice in the last two policy reviews by 0.25 per cent.

The headline inflation for August softened to 3.69 per cent in August as against 4.17 per cent in July. The medium-term target set for the RBI by the government is 4 per cent.

The six-member MPC led by the RBI governor began its three-day meeting on October 3. The rupee has been depreciating to new lows as against the US dollar along with the global crude prices breached the USD 86 to a barrel mark.

The government and RBI have taken a slew of measures to arrest the slide, but those have been termed as ineffective by analysts.

The rupee depreciation is due to the overall strengthening of the US dollar against local currencies, widening of trade and current account deficits due to higher crude prices, portfolio outflows and risk aversion among portfolio investors, it said.

Govt should consider 100% FDI in multi-brand retail trade: CII report
Shaktikanta Das named new RBI Governor
Sensex cracks over 550 pts; Nifty drops below 10,600
India's coal output up 10% to 156 MT during Apr-Nov
Prabhu links creativity & business opportunities to cheap beverages in Goa
31st GST Council to meet on Dec 22 in Delhi
Cabinet Approves Policy to Double Farm Exports to $60 Billion by 2022
RBI keeps key rates unchanged
NTPC wins 85 MW solar capacity in UP Govt tender
Maintain status on currency management, HC tells SBI
Amway India enters herbal skincare space
New 2018 Maruti Suzuki Ertiga Launched In India, Prices Start At ? 7.44 lakh
Centre's New Move May Escalate Feud With RBI Ahead Of Board Meet: Report
Air India eyes Rs 800 cr from sale of over 70 properties
Intel India opens design house costing Rs 1,100 cr at B'luru
Sensex rebounds 332 pts on easing crude, rupee gains
Govt mulls second round of 2,500 MW medium-term PPA auction
India invites Swedish companies to explore investment opportunities
Govt cancels ED officer Rajeshwar Singh's leave
Facebook blocks 115 accounts ahead of US midterm elections
Activist Rehana Fathima, Who Attempted Sabarimala Trek, Arrested Over Facebook Post
 (Kochi, Nov 28, 2018): Model and activist Rehana Fathima, who tried to reach Kerala's Sabarim  
Good news for Keralite Nurses: IELTS cut-off reduced to 6.5
BJP leader K Surendran, 71 others granted bail
Sabarimala protests: Arrests up to 2061, Kerala HC warns police
Khashoggi, other journalists named Time 'Person of the Year'
 New York, Dec 11 (AFP) Saudi journalist Jamal Khashoggi, who was murdered in October at his country'
May tours Europe in desperate bid to save Brexit deal
Trump's potential next chief of staff pick leaving White House
UK PM faces fight for her political life in Brexit deal
Three policemen killed in Shopian by terrorists; weapons snatched
 Three policemen were killed Tuesday when Pakistan-based Jaish-e-Mohammed terrorists attacked a guard
13 of 19 Rajasthan ministers lose elections; CM Vasundhara Raje retains her seat
Clear message to Modi that People are unhappy and it is time for change: Rahul on poll results
BJP mocks Oppn meet, asks them to reveal PM candidate's name
Untitled Page
Rashtra Deepika LTD
Copyright @ 2018 , Rashtra Deepika Ltd.