Home / Industry / Banking /  RBI MPC lowers GDP growth projection to 7% from earlier 7.2% for FY20

Mumbai: The Reserve Bank of India’s monetary policy committee on Thursday announced a 25 basis points cut in key policy rates with an expected change in policy stance to accommodative from neutral.

The repo rate stands reduced to 5.75% from 6% earlier and the reverse repo rate stands adjusted to 5.5%.

The MPC noted that growth has weakened significantly as reflected in a further widening of the output gap compared to the April 2019 policy. A sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern, it noted.

The MPC revised both its growth and inflation forecasts for the current fiscal year. GDP growth has been revised downwards to 7% from the earlier projection of 7.2%. The MPC expects growth in the range of 6.4-6.7% in the first half of 2019-20 and 7.2-7.5% in the second half.

Consumer price inflation forecast for the first half of 2019-20 was revised to 3-3.1% from 2.9-3% earlier, while the projection for the second half stands revised to 3.4-3.7% from 3.5-3.8% earlier.

“Risks around the baseline inflation trajectory emanate from uncertainties relating to the monsoon, unseasonal spike in vegetable prices, international fuel prices and their pass-through to domestic prices, geo-political tensions, financial market volatility and the fiscal scenario," the RBI policy stated.

The MPC members unanimously decided to reduce the policy rate and also change the monetary policy stance.


Gopika Gopakumar

Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout