New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India on Thursday will announce its decision on the key lending rate. While a 25 basis points (bps) rate cut to 4.90% is widely expected, making it the sixth consecutive rate cut in 2019, stakeholders will watch out for MPC’s commentary on the growth situation as opposed to inflation, which breached RBI’s target of 4% in October.
Here is a timeline of the MPC’s stance, forecast for growth and inflation in the past five credit policies:
February: The MPC changed its monetary policy stance from calibrated tightening to neutral. GDP growth for 2019-20 was projected at 7.4%. The committee revised downwards headline inflation rate based on consumer price index (CPI) outlook to 2.8% for the March quarter of the fiscal year 2018-19. Inflation was forecast at 3.2-3.4% for the first half of 2019-20 and 3.9% in October-December of 2019-20.
April: The MPC decided to maintain neutral monetary policy stance. The committee forecast GDP growth for 2019-20 at 7.2% in the range of 6.8-7.1% in the first half of 2019-20 and 7.3-7.4% in the second half. CPI inflation estimate was revised downwards to 2.4% for the March quarter of 2018-19, 2.9-3.0% in the first half of 2019-20 and 3.5-3.8% in the second half of the current financial year.
June: The MPC changed its stance of monetary policy from neutral to accommodative. Amid emerging signs of an economic slowdown and some sectors witnessing a sharp slump, the committee cut its GDP growth forecast for 2019-20 to 7.0% from 7.2% in the April policy. The projection for CPI inflation was revised upwards to 3.0-3.1% for the first half of 2019-20 and to 3.4-3.7% for the second half.
August: The MPC maintained an accommodative stance. The committee revised downwards GDP growth forecast for 2019-20 to 6.9% from 7.0% in the June policy in the range of 5.8-6.6% for the first half and 7.3-7.5% for the second. CPI inflation was estimated at 3.1% for July-September in 2019-20 and 3.5-3.7% for the second half of 2019-20. CPI inflation for the June quarter in 2020-21 was estimated at 3.6%.
October: The MPC maintained its accommodative stance and said it would continue to do so as long as it is necessary to revive growth, while ensuring that inflation remains within the target. The committee revised downwards GDP growth forecast for 2019-20 to 6.1% from 6.9% in the August policy. The estimate for CPI inflation was revised slightly upwards to 3.4% for the quarter-ended September in 2019-20, while the projection was retained at 3.5-3.7% for the second half of 2019-20.