RBI Monetary Policy LIVE: MPC keeps Policy Repo Rate Unchanged
The Reserve Bank of India (RBI) Wednesday kept its key lending rate—the repo rate—unchanged at 6 percent, but warned about lurking inflation worries in the new year, amid signs that costlier food and fuel prices could pinch household budgets.
The six member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, ignored calls from business leaders to cut interest rates to boost investment and accelerate growth in the broader economy that has shown signs of revival in the last few months.
The MPC felt India’s retail inflation, which was galloping towards the RBI’s tolerable 4 percent threshold driven by costlier vegetables; need to be firmly bottled up first before lowering loan costs.
Surging onion prices, which is currently retailing around Rs 65 a kg in some markets, has pushed up kitchen budgets. Unseasonal rains have affected supplies of the summer-sown (kharif) onion crop this year, pushing up retail prices. Last month the government allowed state-owned agencies to buy onions from overseas markets, to bolster local supplies and keep a check on shop-end prices of the commonly-used bulb in most Indian curries.
The RBI also kept one eye on global oil prices that has nudged higher, following last week’s deal between Organization of Petroleum Exporting Countries (OPEC) and other crude producers to curb production by 1.8 million barrels per day (bpd) until the end of 2018. This will likely drive up prices.
This could knock up pump-gate diesel and petrol prices in India, which imports more than two-thirds of its crude oil requirements.