RBI keeps repo rate unchanged at 5.15%; Lowers GDP forecast from 6.1% to 5%
New Delhi, Dec 05: The Reserve Bank of India (RBI) on Thursday kept repo rate unchanged at 5.15 percent in its fifth bi-monthly monetary policy review of the financial year. The MPC unanimously voted for status quo on repo rate.
Between February and October 2019, the RBI has reduced repo rate by 135 basis points. FY20 real GDP growth projection cut to 5 per cent from 6.1 per cent.
The CPI inflation projection is revised upwards to 5.1-4.7 per cent for H2 FY20 and 4-3.8 per cent for H1 FY21.
"GDP growth for Q2 turned out to be significantly lower than projected. Various high frequency indicators suggest that domestic and external demand conditions have remained weak. Based on the early results, the business expectations index of the Reserve Bank's industrial outlook survey indicates a marginal pickup in business sentiments in Q4," RBI said in a statement.
"The need at this juncture is to address impediments, which are holding back investments. The introduction of external benchmarks is expected to strengthen monetary transmission. In this context, there is also a need for greater flexibility in the adjustment in interest rates on small saving schemes," the statement read.
The panel decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.