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RBI Bi Monthly Monetary Policy

RBI Bi Monthly Monetary Policy

Reserve Bank has recently launched its second Bi-Monthly Monetary Policy Rates for the year 2018-19 on 2nd August 2018 in Mumbai. The Reserve Bank of India’s monetary policy committee (MPC) has decided to increase the repo rate this time. With an unbelievable increase in the key repo rate by 0.25% to 6.50%, the analysts seemed to be quite surprised with the decision taken by the MPC.

Current Policy Rates and Reserve Ratios – RBI Bi-Monthly Monetary Policy

 Policy Rate
 Policy Repo Rate  6.50%
 Reverse Repo Rate  6.25%
 Marginal Standing Facility Rate  6.75%
Bank Rate  6.75%
CRR  4%
SLR  19.5%

Important Highlights of RBI Bi Monthly Policy 2018-19

  • RBI has raised the key repo rate by 25 basis points to 6.50%
  • Concurrently, the reverse repo rate adjusted to 6.25%, whereas the marginal standing facility (MSF) rate and the Bank Rate to 6.75 %
  • Projects retail inflation is noted at 4.8-4.9% for April-September, 4.8% in H2
  • The projection for GDP growth for 2018-19 was maintained at 7.4%. GDP growth is projected in the range of 7.5-7.6% in the first half and 7.3-7.4% in the second half.
  • Geopolitical risks, global financial market volatility and the threat of trade protectionism is surely to impact domestic growth
  • Crude oil prices and uncertain global financial markets development risk to inflation outlook. The prices have been increased by 12 percent

Know About Repo Rate and Reverse Repo Rate

Repo Rate – It is the rate at which RBI lends the money to commercial banks in the event of the scarcity of funds.

Reverse Repo Rate – Vice Versa! The rate at which RBI borrows money from commercial banks.

Bank Rate – It is the rate of interest implemented by RBI while lending money to any public sector bank on a long-term basis. The period may range from 90 days to 1 year.

Cash Reserve Ratio – The fund amount that the banks need to keep with the RBI. The current CRR is 4%

Statutory Liquidity Ratio (SLR) – It is the minimum percentage of deposits the bank has to maintain in the form of gold. cash or other approved securities.

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