RBI keeps repo rate unchanged at 5.15 per cent
New Delhi, Dec 5 (KNN) The Reserve Bank of India (RBI) on Thursday kept repo rate unchanged at 5.15 per cent in its fifth bi-monthly policy review of the year.
In its last monetary policy review, the central bank cut the key policy rates by 25 basis points (100 basis points = 1 per cent). Since February 2019, the repo rate has been cut by a total of 135 bps.
"After the introduction of the external benchmark system, most banks have linked their lending rates to the policy repo rate of the Reserve Bank. The median term deposit rate has declined by 47 bps during February-November 2019. The weighted average term deposit rate declined by 9 bps in October as against a decline of just 7 bps in eight months during February-September. This augurs well for transmission to lending rates, going forward," the apex bank said in its monetary policy statement.
The six members of the monetary policy committee (MPC) were unanimous in their decision to hold rates.
“The MPC recognises that there is monetary policy space for future action. However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture. Accordingly, the MPC decided to keep the policy repo rate unchanged and continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target," the RBI added.
The banking body also expressed concern over contraction in the output of eight core industries as well.
Citing a sudden spike in inflation, it sharply increased its inflation projection from 4.7 to 5.1 per cent after retail inflation jumped to a 16-month high of 4.62 per cent in October.