At its last policy meeting on 31 July, the Reserve Bank of India (RBI) left the repo rate unchanged at 8.00% and the reverse repo rate at 7.00%, in a decision widely expected by the market. The Bank also left the cash reserve ratio unchanged at 4.75%. According to the RBI, global macroeconomic conditions have deteriorated and most of the world economy is now in a synchronised slowdown. Domestically, recent data from the industrial sector points to a slowdown in economic activity; furthermore, a deficient and uneven monsoon is hurting growth prospects. Regarding price developments, the Bank noted that, despite a recent moderation, price pressures persist due to both exchange rate movements and supply side constraints. In addition, international crude prices remain elevated, putting additional pressure on domestic fuel prices. Against this backdrop of slowing growth and high inflation, the RBI judged appropriated to leave interest rates unchanged, as inflation remains well above the comfort zone of the Reserve Bank. The RBI maintained a rather hawkish stance, adding that the challenge for monetary policy is to maintain its commitment to firmly containing inflation and lowering inflation expectations.
India Monetary Policy
Central Bank remains on hold despite slowing economy
August 23, 2012
Looking for forecasts related to Monetary Policy in India? Download a sample report now.
India Monetary Policy Chart
Note: Reserve Bank of India (RBI) Repo Rate in %.
Source: Reserve Bank of India (RBI).
India Economic News
October 17, 2016
Recently-released data related to India’s external sector showed that the trade deficit totaled USD 8.3 billion in September, which was a smaller shortfall than the USD 10.2 billion gap recorded in September 2015 (August 2016: USD 7.7 billion deficit).
October 15, 2016
In September, consumer prices fell 0.23% from the previous month, which followed August’s flat growth.
October 12, 2016
The fall in industrial production moderated in August, after recording the largest contraction since November 2015 in July.
October 5, 2016
Activity in India’s manufacturing sector lost steam in September.
October 4, 2016
The newly facelifted Reserve Bank of India (RBI) decided to ease monetary policy at a scheduled meeting on 4 October, cutting the repurchase rate from 6.50% to 6.25%—an over five-year low.