The Reserve Bank of India kept its key interest rate unchanged in line with expectations. The Monetary Policy Committee (MPC) on Wednesday kept the repo rate unchanged at 6% in the fifth bi-monthly meet. The concerns were raised about inflationary risks, mainly due to higher housing, food and fuel prices. In addition, the country’s inflation forecast for the second half of the current financial year rose between 4.3% and 4.7%.
“Recapitalization of public sector banks may help improve credit flows further”, said the Reserve Bank of India in official statement after the meeting. “The recent reforms undertaken will help pick up the rate of growth”, adds the statement.
Consequently, the reverse repo rate under the LAF remains at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%.
In the summer of 2017, the Monetary Policy Committee cut interest rates in line with the 4% medium-term growth target in the consumer price index. The Committee assesses that the recapitalization, among the other developments in the last two months, has helped to bring up the sluggish growth. The capital infused has helped in raising the market by setting up new projects.
Like most Asian measures on Wednesday, Indian indices are on red territory. Benchmark CSI 300 reported a decline of 0.6% to 4 015.82 points.