RBI Keeps Status Quo On Key Rates To Rein In Prices

Slashes GDP growth forecast to 7-year low of 5%, sees inflation rising

The RBI, in its monetary policy review on Thursday, decided not to go in for another interest rate cut to spur growth in a slowing economy as it is worried over rising prices with inflation having breached the 4 per cent danger mark.

The RBI also cut its GDP growth forecast to a 7-year low of 5 per cent for the current fiscal year (2019-20) from the earlier estimate of 6.1 per cent.

After five interest rate cuts in a row this year, the six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted to hold the key repo rate at 5.15 per cent and reverse repo rate at 4.90 per cent.

Explaining its decision, the MPC said it was concerned about inflation in the near-term, while acknowledging that there is room to cut rates further.

“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,” the committee said in a statement.