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RBI's 5th Bi-monthly Monetary Policy Review

Published on December 08, 2017
The six-member monetary policy committee of RBI has decided to keep the repo rate unchanged at 6% under the liquidity adjustment facility (LAF).

Consequently, the reverse repo rate and bank rate also remained unchanged at 5.75% and 6.25% respectively.

The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth. 

Assessments of the 5th Bi-monthly Monetary Policy

  • Since October 2017, the global economic activities have seen a rise as a result of advanced economies (AEs)
  •  The unemployment rate fell to 4.1 percent in October
  • On the domestic front, the growth of real gross value added (GVA) accelerated sequentially in Q2 of 2017-18
  • GVA growth in the manufacturing sector accelerated sharply on improved demand and re-stocking post goods and services tax (GST) implementation. 
  •  In contrast, growth in agriculture and allied activities slackened, reflecting the lower than expected kharif harvest. 
  • Te Purchasing Managers’ Index (PMI) for manufacturing rebounded in November, driven by output and new orders.
  • The Reserve Bank conducted open market sales of Rs. 300 billion in October-November
  • CPI inflation excluding food and fuel remained steady in October. 
  • Currency in circulation increased by Rs. 736 billion in Q3 (up to December 1, 2017)
  • The October bi-monthly statement projected inflation to rise and range between 4.2-4.6 per cent in the second half of this year
  • On the whole, inflation is estimated in the range 4.3-4.7 per cent in Q3 and Q4 of this year, including the HRA effect of up to 35 basis points, with risks evenly balanced

Members of Monetary Policy Committee 

  • Urjit Patel-Chairman
  • Viral A Acharya
  • Michael Patra
  • Professor Pami Dua
  • Dr. Ravindra H. Dholakia

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