MPC Current Affairs - 2019
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The six-member monetary policy committee (MPC) headed by RBI Governor Shaktikanta Das has lowered the repo rate by 25 basis points to 6.25 per cent in a 4-2 vote.
Important decisions by the MPC
The features of the decisions taken by MPC are:
- Together with lowering the repo rate by 25 basis points to 6.25 per cent, the policy stance has been changed to neutral from calibrated tightening.
- The shift in stance to neutral provides flexibility to meet growth challenges.
- The change in stance also signals higher chances of more cuts in the coming months if inflation persisted within tolerable limits.
- A large part of the current investment recovery has been driven by government spending and it was necessary to broad base the revival with a private sector boost.
Other announcements made by RBI
- The limit of collateral free bank loans for farmers to Rs 1.6 lakh from Rs 1 lakh
- Greater operational freedom for Banks to offer interest rates to bulk deposits.
- The definition of “bulk deposits” has been increased to Rs 2 crore from Rs 1 crore currently.
- The headline inflation is likely to persist within the RBI’s tolerable level of 4 per cent.
While the decision to change the monetary policy stance was unanimous, Deputy Governor Viral Acharya and another MPC member, Chetan Ghate, voted for status quo in interest rates, while Das and three others voted for a cut in interest rates.
The Reserve bank of India (RBI) in its fifth bi-monthly monetary policy review for year 2016-17 has kept key rates unchanged.
Decision in this regard was taken by RBI’s six-member Monetary Policy Committee (MPC) headed by Governor Urjit Patel. This decision was taken on the basis of an assessment of the current and evolving macroeconomic situation.
- Repo rate under the liquidity adjustment facility (LAF): Unchanged at 6.25 percent.
- Reverse repo rate under the LAF: Unchanged at 5.75 per cent.
- Marginal standing facility (MSF) and Bank Rate: Unchanged at 6.75 per cent.
- Reserve Ratios Cash Reserve Ratio (CRR) of scheduled banks: Unchanged at 4.0 per cent of net demand and time liability (NDTL).
- Statutory Liquidity Ratio (SLR): Unchanged 20.75 per cent.
The policy repo rate where kept unchanged citing global and domestic uncertainties that posed upside risks to inflation. The MPC also has cut Gross Value Added (GVA) growth estimates for the economy in the fiscal year ending March 2017 to 7.1% from 7.6% earlier.
Thus, RBI has retained its “accommodative” monetary policy stance with the objective of achieving consumer price index (CPI) inflation at 5% by Q4 of 2016-17 and the medium-term target of 4% within a band of +/- 2 per cent, while supporting growth.