RBI Strikes the Balance by Maintaining Status Quo

MUMBAI:
RBI has kept the Benchmark Policy Rate- Repo unchanged at 6.0% in its First Bi-Monthly Monetary Policy (2018-19). The move shows the RBI’s view on softened retail inflation in recent months. More importantly, RBI has revised down its CPI forecast to 4.7-5.1% in first half and 4.4% in the second half of FY 2018-19.
On the growth side, RBI has projected better GDP growth in the current fiscal. GDP growth is projected from 6.6% in 2017-18 to 7.4% in 2018-19, with evenly balanced risks. At the same time this takes note of some near-term risk like, inflationary push from any fiscal slippages, lack-luster monsoon, volatile crude oil price, etc.
Also, the IndAS implementations have been deferred by one more year, which will give the banks some time to align with the required changes.
This reiterates RBI’s commitment to manage inflation at 4% level, while taking care of real economy growth at the same time. Moreover, the intent of the policy seems neutral and sends signals for supporting growth in near-term.