RBI’s 24th Governor Urjit Patel, who has been recently appointed, has announced his first and country’s 4th Bi-monthly Policy Statement for the year 2016-17. Monetary policy is the process by which the monetary authority of a country controls the supply of money.
Highlights of 4th Bi-monthly Policy Statement:
Cash reserve ratio or CRR unchanged at 4%
rowth forecast at 7.6% for the current fiscal
Normal monsoon to quicken growth momentum
Inflation target remains 5% for March 2017, upside risk
6-member Monetary Policy Committee makes India’s first collective interest rate decision
All MPC members voted in favour of rate cut
Foreign exchange reserve rose to all-time high of USD 372 billion by September
Govt has announced measures to cool food inflation, which opened up space for rate cut
Banks should cut lending rates as small savings rate has been lowered
RBI Governor expects further downgrading of global growth
To allow start-ups to raise up to USD 3 million ECB annually
Next monetary policy on December 7.
RBI’s research department sees inflation at 5.3 percent in Jan-Mar 2017, from 5 per cent in the previous quarter
Sees growth picking up to 7.9 percent in next year
Pay Commission recommendations to spur price pressure
Uncertainty around US elections, crude prices, global demand.
The Reserve Bank of India (RBI) on Tuesday cut repo rate by 25 bps to 6.25 per cent. Reverse repo rate under the LAF stands adjusted to 5.75 percent and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent