RBI's neutral policy stance a recognition of under-control inflation: Finance Ministry

Reacting cautiously, the government on Wednesday said it has taken note of the RBI maintaining status quo on key lending rates and said a neutral policy stance reflected recognition of the fact that inflation remained "firmly under control".

"The Monetary Policy Committee (MPC) recognized that inflation remains firmly under control, retaining its inflation projection for the second half of FY 2018 and assessing that the risks to this projection are evenly balanced. For that reason, it has maintained a neutral policy stance," a Ministry statement said.

"The MPC has also retained its annual GVA forecast for FY18 of 6.7 per cent recognising several significant developments and emphasizing the government`s reform efforts such as GST, Bank Recapitalization Package and improving Ease of Doing Business Ranking," it added.

RBI Governor Urjit Patel along with six-member Monetary Policy Committee (MPC) on Wednesday maintained status quo for the second time in a row during fifth-bi-monthly monetary policy of FY18.

Policy repo rate under the  liquidity adjustment facility (LAF) continues to stand at 6%, while reverse repo rate under the LAF remains at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%.

Further, the central bank has also remains firm on its neutral stance, which was changed from earlier accomodative.