RBI keeps rates on hold

Tribune News Service/PTI

Mumbai, December 5

The RBI today left key policy rates unchanged even as it said ‘calibrated tightening’ of policy would be maintained.

The key repo rate has been maintained at 6.5%. RBI Governor Urjit Patel said the decision on cash reserve ratio (CRR), the cash which banks have to maintain with the central bank, was not within the ambit of the Monetary Policy Committee (MPC). This is for the second time in a row that the central bank did not tinker with the interest rate.

“The decision of the MPC is consistent with the stance of calibrated tightening of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/-2%, while supporting growth,” RBI said.

The central bank also projected GDP growth for FY19 at 7.4%. For the first half of 2019-20, the GDP growth is pegged at 7.5%.

RBI Governor Urjit Patel refused comments on the friction with the government, including the invocation of the never-before-used Section 7 or the proposed economic capital framework for the Central bank.

Speaking at the customary post-policy presser after the monetary policy review, he parried three questions on these issues.

“I would avoid those questions because we are here discussing the monetary policy resolution,” he said.

Another question seeking his views on Deputy Governor Viral Acharya’s public posturing on RBI autonomy and on the economic capital management framework were also met with similar replies. “Is this related to the MPC resolution? I don’t think so. We are here to discuss the MPC resolution and the macro-economy,” said Patel, who was facing the press for the first time since the issues came out into the open in October.