RBI policy review 2019 highlights: The Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, announces the resolution of the MPC on its fourth bi-monthly monetary policy for financial year 2019-20 today. The Zee Business poll prediction of the RBI reducing rate cut by 25 basis points (0.25%) comes true.
Here are the key highlights:
1. RBI's monetary policy committee decided to cut repo rates by 25 basis points to 5.15 percent.
2. The reverse repo rate under the LAF stands reduced to 4.90 per cent
3. The marginal standing facility (MSF) rate and the Bank Rate to 5.40 per cent.
4. The MPC also decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.
5. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
6. Indian shares rose today ahead of a likely interest rate cut by the RBI in the backdrop of slowing economic growth, with beaten-down banking stocks leading gains.
7. The minutes of the MPC’s meeting will be published by October 18, 2019.
8. The next meeting of the MPC is scheduled during December 3-5, 2019.
9. In the August policy, all members of the MPC (Monetary Policy Committee) unanimously voted to reduce the policy repo rate and to maintain the accommodative stance of the monetary policy.
10. RBI Governor Shaktikanta Das, according to the minutes of the meeting, had justified the RBI`s unconventional move saying, "the economy needed a larger push" and a reduction in the policy repo rate by the conventional 25bps would be inadequate.
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Meanwhile, RBI Governor Shaktikanata Das after the repo rate cut announcement highlighted the fact that the MPC was one in its desire to get the economy moving forward. He said, "All five MPC members supported the cut, they voted unanimously to slash the repo rate by 25 basis points".
Governor Das added, "There is a dearth in demand in rural and urban areas, but things have improved in agriculture sector."
Governor Das also said, "In August, there has been marked uncertainty global economy."
As far as economic growth is concerned, Governor Das said, "FY20 Q2 GDP growth is expected to come in at 5.3%. RBI will take strong steps to deal with situation".
Refuting all reports of any shortage in funds in the system, Governor Das said, "Since August-September, there is no shortage in liquidity at all."
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