Mumbai: The Reserve Bank today kept the key policy rate unchanged at 6 percent for the fourth consecutive time since August last year in view of uncertainties around inflation. The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, had last reduced the benchmark lending rate by 0.25 percentage points to 6 percent last August, bringing it to a 6-year low.
“The MPC decided to keep the policy repo rate on hold and continue with the neutral stance. The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis,” said the first bi-monthly monetary policy for 2018-19.
The repo rate, at which the central bank lends short-term money to other banks, will continue to stay at 6 percent. The reverse repo, rate at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 percent.
The headline inflation after surging to a concerning 5.2 per cent in December last year, cooled off to 5.07 per cent in January and further to 4.4 per cent in February. RBI has been asked by the government to target inflation at 4 percent, plus or minus 2 percent, and its rise beyond the comfort zone will put pressure on the central bank not cut interest rate (repo rate).