RBI keeps interest rates unchanged

Irving Hamilton
December 5, 2018

In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent. Treasury heads of 10 banks surveyed by Mint said the RBI repo rate would be maintained at 6.5% and the policy stance would remain "calibrated tightening".

The RBI, however, lowered inflation forecast sharply for the second half (six months) of 2018-19 to 2.7 per cent-3.2 per cent.

SLR lowered to align with Liquidity Coverage Ratio: In order to align the SLR with the LCR requirement, the MPC made a decision to reduce the SLR by 25 basis points every calendar quarter until the SLR reaches 18 per cent of Net Demand and Time Liabilities (NDTL). Currently, SLR stands at 19.5 percent.

RBI to announce its fifth bi-monthly monetary policy review of the current financial year this afternoon

While many expected the RBI's MPC to change its stance due drop in global crude oil prices and appreciation of the rupee, the central bank is now expected to hold off the rates till the next bi-monthly meet. This step, however, may harden yields in the government securities market as the process would allow banks to reduce government security holding cumulatively to the tune of Rs 2 trillion.

The Central Bank of the Republic of Turkey (CBRT) will continue to effectively use all policy instruments at hand to maintain price stability in 2019, according to its new fiscal and monetary policy for the new year announced Wednesday. The RBI retained the GDP growth projection at 7.4 per cent for financial year 2018-19. However, headline inflation, as measured by the consumer price index (CPI), for October came in below RBI estimates at 3.31%. The three-day policy review meeting of the Monetary Policy Committee (MPC) headed by Governor Urjit Patel began in Mumbai on Monday. FDI flows could also increase with the improving prospects of the external sector.

Will RBI lower the cash reserve ratio for banks? This may inject almost ₹65,000 crore of liquidity into the system.

Tsunami warning for Vanuatu and New Caledonia after 7.6 magnitude natural disaster
The magnitude 7.5 quake hit in the afternoon near New Caledonia at a shallow depth, where earthquakes are generally more damaging. The populations of Vanuatu and New Caledonia are similar, with just over 280,000 people living in each archipelago.

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