RBI Monetary Policy December 2018 HIGHLIGHTS: The Reserve Bank of India (RBI) on Wednesday not only kept the repo rate unchanged at 6.5% but also maintained the ‘calibrated tightening’ stance. While the market was expecting another status quo from the central bank’s monetary policy committee upon moderate inflation, lower crude oil price and strengthening of the rupee, no change in stance could come as a disappointment to many.
However, governor Urjit Patel signalled the possibility of rate cut in future. “..see space for commensurate policy action if inflation risks don’t materialise,” Patel said.
In the last MPC, the RBI’s decision to not hike the repo rate took everyone by surprise as the market was bracing for it as an intervention amid the rupee rout. RBI governor Urjit Patel defended the decision by saying that the central bank’s mandate is inflation targeting. He also said that the change in stance from ‘neutral’ to ‘calibrated tightening’ meant that the rate cut was off the table.