RBI Monetary Policy October HIGHLIGHTS: The Reserve Bank of India today kept the repo rate unchanged at 6.5%, surprising the market, which had widely expected a rate hike of 25 basis points.
RBI Monetary Policy October 2018 HIGHLIGHTS:The Reserve Bank of India (RBI) today kept the repo rate unchanged at 6.5%, spooking the market, which had widely expected a rate hike of 25 basis points. While the RBI decided to maintain the status quo, it turned hawkish and ruled out any rate cut in future by changing stance from ‘Neutral’ to ‘Calibrated Tightening’.
The central bank held its fourth Monetary Policy Committee (MPC) meeting of FY19 against the backdrop of the sharp depreciation in the rupee, rising crude oil prices, intense pressure on current account deficit (CAD) and liquidity issues. Market watchers and top economists were expecting a 25 basis point hike once again after June and August.
Reacting to the RBI’s surprise decision, the rupee breached 74 vs dollar mark for the first time today, before paring some losses, while Sensex closed almost 800 points down. The central bank had hiked interest rate by 25 basis points each in June and August, citing upward pressure on inflation and volatility in crude oil prices.