Department of Economics Affairs Secretary Subhash Chandra Garg on Thursday called the RBI announcement of cutting repo rate a “very balanced and pragmatic policy”, saying the Government welcomes the decision.
He said the assessment of the Monetary Policy Committee (MPC) for growth and inflation outlook is consistent with the Government’s assessment of inflation and growth.
“The Government welcomes the assessment of the MPC and its decision to reduce the Policy Rate and change of Monetary Policy Stance,” he said in a statement here.
Soon after the RBI cut the repo rate, Mr Garg took on the social media and tweeted, “A very balanced and pragmatic policy statement. Assessment of growth and inflation is quite realistic and underlines low inflation and high growth path for India for 2019-20. Welcome change of stance to neutral and rate cut by 25 bps. Also welcome removal of FPI restriction.”
Earlier in the day, the MPC in its sixth bi-monthly statement on the basis of its assessment of the current and evolving Macroeconomic situation, decided to reduce the Policy Repo Rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect.
Consequently, the Reverse Repo Rate under the LAF stands adjusted to 6.0 per cent, and the Marginal Standing Facility (MSF) Rate and the Bank Rate to 6.5 per cent.
The MPC also decided to change the Monetary Policy Stance from Calibrated Tightening to Neutral.
As against the GDP growth projection of 7.4 per cent for 2018-19 in the fifth Bi-monthly resolution in December, 2018, the Central Statistic Office has estimated GDP growth at 7.2 per cent. However, the GDP growth for 2019-20 is projected at 7.4 per cent.
The actual Inflation outcome at 2.6 per cent in Q3: 2018-19 was marginally lower than the projection. The projections of inflation for 2018-19 and H1:2019-20 have been revised downwards from the December resolution.(UNI)