In the fourth successive policy review, RBI has decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6 per cent. At the same time, it has also kept the reverse repo rate under the LAF unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.
The decision was taken by a six member Monetary Policy Committee (MPC). After the meeting, RBI releases a statement which said, “The decision is consistent with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent.”
Last year, the MPC headed by RBI governor Urjit Patel, had reduced the benchmark lending rate by 0.25 percentage points to six per cent in August 2017, bringing it to a six-year low. As per stats, Retail inflation based on the CPI fell 5.1 percent in January to 4.44 per cent in February.
The release also said that GDP growth is projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19.
To understand better, Repo rate is the rate at which the RBI lends money to commercial banks, and CRR is the amount banks have to mandatorily maintain with the RBI.