RBI keeps repo rate unchanged at 6 percent, raises inflation forecast

The Reserve Bank kept the key policy rate unchanged at 6 per cent for the third consecutive time in view of firming inflation.

The panel voted 5 to 1 in favour of a status quo on rates. It also flagged off upward risks to inflation and lowered the growth projections for this year and next year marginally.

The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.

The repo rate remains 6 percent, the lowest since November 2010, and the reverse repo rate continues to be 5.75 percent. The



repo rate is the interest rate at which the central bank lends to banks, and the reverse repo rate is the rate at which it borrows from banks.

The RBI, in its policy statement, has lowered economic growth projection to 6.6 per cent for 2017-18, from 6.7 per cent. It has estimated 7.2 per cent growth in the next fiscal.

The central bank has predicted inflation at 5.1% for January-March 2018. In its previous meeting, it had slightly raised its forecast for inflation during October 2017-March 2018 to 4.3-4.7%. But then, in December 2017, retail inflation in India rose to a 17-month high of 5.21%, which was above the RBI's target of 4%.