RBI bimonthly Monetary Policy

Question: What is the Repo Rate, decided by the RBI in the latest Monetary Policy review on June 7, 2019 which is the lowest since 2010?
(a) 5.5%
(b) 6%
(c) 5.75%
(d) 6.25%
Answer: (c)
Related facts:

  • At the end of a three-day MPC meeting on June 7, 2019, RBI Governor Shaktikanta Das announced its second bi-monthly monetary policy statement for 2019-20.
  • Among all the decisions taken, the Repo Rate was decided to be decreased further to 5.75% with a 25 point cut due to slowing economic growth and rising global uncertainty.
  • This is the third continuous decrease in the Repo Rate which makes it the lowest since 2010.

Important Highlights of the Policy:

  • The Reverse repo rate is now 5.50 % and Marginal Standing Facility (MSF) rate is 6 %.
  • RBI changes policy stance to accommodative from neutral
  • It has also decreased the GDP growth forecast of economy to 7 % from 7.2 % for FY 2020
  • The retail inflation forecast for April-September 2019 is raised to 3-3.1 per cent and 3.4-3.7 per cent in October-March 2020.
  • The risk of inflation is estimated due to uncertain monsoon, unseasonal rise in vegetable prices, crude oil prices, financial market volatility and fiscal scenario.
  • RTGS and NEFT charges are waived to promote digital transactions.
  • A new panel will be set up to review ATM charges, fees levied by banks.
  • Average daily surplus liquidity in the system at ₹ 66,000 crore in early June
  • Foreign Exchange Reserves stood at USD 421.9 billion on May 31, 2019
  • Next monetary policy statement on August 7, 2019.

Links:
https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=47225
https://www.business-standard.com/article/finance/monetary-policy-rbi-may-cut-rates-turn-accommodative-after-dismal-gdp-119060400156_1.html
https://www.thehindubusinessline.com/money-and-banking/highlights-of-rbis-monetary-policy-statement/article27546167.ece
https://www.livemint.com/industry/banking/rbi-monetary-policy-live-updates-1559792726329.html

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