Monetary Policy: MPC Begins New Financial Year With A Status Quo On Rates

The monetary policy committee left interest rates unchanged at its first meeting of the new financial year, indicating that the economy is finely balanced between a pick-up in growth and a rise in inflation. The MPC has also maintained a neutral stance on monetary policy.

Following the MPC’s review, the benchmark repo rate remains unchanged at 6 percent. The reverse repo rate has been retained at 5.75 percent. The decision was taken by a vote of 5-1 with Michael Patra voting for a 25 basis point hike in rates. The decision was in line with market expectations. All of the 42 economists polled by Bloomberg News forecast a status quo on rates.

The MPC decided to keep the policy repo rate on hold and continue with the neutral stance. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis.