Monetary Policy Committee Current Affairs - 2020

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RBI releases bi-monthly policy: Repo rate unchanged

On February 6, 2020, the Reserve Bank of India released its bi-monthly monetary policy. The apex bank has kept the policy repo rate unchanged. It remains at 5.15%.

Observations of the Committee

The Monetary Policy Committee that meets once in two months under the chairmanship of its Governor has made the following observations

  • The inflation has increased and the unusual price hike in onions has been the main reason behind price rise. The Retail Inflation has increased from 4.6% in October to 5.5% in November. It increased further to 7.4% in December 2019. It is the highest since July 2014.
  • The Committee estimates CPI for Q4 of the Financial Year 2020 at 6.5%. For Q3, it was at 3.2%.
  • The Reverse Repo Rate under the Liquidity Adjustment Facility remained unchanged at 4.9%
  • The Bank Rate and the Marginal Standing Facility Rate stood at 5.4%

Economic Slowdown

According to RBI, the economic slow down is mainly due to muted corporate investments, weak household spending and slowdown in construction and manufacturing activity.

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RBI fifth bi-monthly Monetary Policy released

The Reserve Bank of India on December 5, 2019, released its fifth bi-monthly monetary policy statement for the year 2019-20.

Highlights

According to the policy, the repo rate was unchanged at 5.15%. Last time, it was cut by 135 basis points to a 9-year low. Accordingly, the reverse repo rate stood at 4.9% and the bank rate stood at 5.4%. The CPI projection was increased to 4.7% to 5.1%. It is to be noted that RBI is currently following target inflation at 4% with a band of ±2 per cent.

The Monetary Policy Committee said that the global economic activity has subdued since its last meeting.

Other Assessment of the committee

Among the other emerging markets, growth of China has decelerated in the Q3 and its exports have declined greatly mainly due to trade tensions with the US. The GDP growth of Russia and Brazil in the Q3 has accelerated. It was mainly due to agricultural output and industrial activities.

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