The repo rate, at which the RBI lends to the system, will continue to be at 6.5 per cent and the reverse repo at which it absorbs excess funds will be 6.25 per cent.
The Monetary Policy Committee (MPC) voted 5:1 in favour of a status quo, with only Chetan Ghate voting for a 0.25 per cent hike.
The MPC headed by RBI Governor Urjit Patel said that the recent excise duty cut by the government on petrol and diesel will help contain inflation.
RBI monetary policy Committee highlights:
RBI explains the status quo
Urjit Patel said that the mandate of the RBI is to target inflation at 4% (with 2% flexibility). He said that whatever risks are there have been included in the inflation forecast. "We had two rate hikes earlier. Today's stance is 'calibrated tightening', which means that in this cycle rate cut is off the table," he said.
Subhash Chandra Garg
Economic Affairs Secretary Subhash Chandra Garg said, "government welcomes MPC statement and decision to keep the rates unchanged. 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."
— RBI Governor, Urjit Patel said risks emerging from US Fed tightening, escalating tariff wars. He said real GDP surged to a high in Q1 on the back of strong investments and exports saw double-digit growth in manufacturing while services moderated from a high base.
— Urjit Patel said fiscal slippage by States or Centre will have bearing on inflation outlook; tighter global and local financial conditions could pose risk to growth.
Kharif production estimated to be higher than last year's record level, said Patel.
Urjit Patel lauds quick decision in IL&FS crisis case
Urjit Patel lauded quick decision making by the government to manage the crisis in IL&FS and said that it helped calm the market. The government took a Satyam-like step to supersede IL&FS board to fix problems at the company under top banker Uday Kotak.
* Monetary Policy Committee revised CPI Inflation target lower for Q2FY19 to 4% from 4.6%, H2FY19 to 3.9-4.5% from 4.8% & Q1FY20 to 4.8% from 5%.
* RBI said FY20 GDP growth seen at 7.6%.
* Market slipped further; Nifty & midcap index fell nearly 2%.
* Rupee weakened after RBI maintained status-quo at 74 to the dollar for the first time.
* RBI says FY19 central fiscal deficit seen at 3.3%, combined state/Centre fiscal gap seen at 5.9%.
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