RBI status quo on key rate indicates growth will pick up: Garg

New Delhi: RBI’s decision to maintain status quo on policy interest rate is a welcome move and indicates that the growth will pick up from here onwards, a senior finance ministry official said on Friday.

“The Monetary Policy Committee (MPC) in its 6th bi- monthly Statement, issued on February 7, updated its inflation and real GDP growth projections for this year and for 2018- 19,” Economic Affairs Secretary S C Garg said in a statement.

He said the MPC expects growth to accelerate in 2018-19, and inflation to converge back towards its target level in the second half of next fiscal, starting April 1.

“The government welcomes the MPC’s assessment and notes its decision to maintain the policy rate,” he said.

Earlier this week, the Reserve Bank of India (RBI) opted for the widely expected status quo in key rates citing inflation concerns and flagged risks from wider fiscal deficit.

The repo rate, at which the central bank lends short-term money, will continue to stay at 6 per cent. The reverse repo, rate at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 per cent.

The resolution of the 6-member Monetary Policy Committee (MPC) said that “the inflation outlook is clouded by several uncertainties on the upside”, and flagged risks from 7th pay panel implementation in states, high oil prices, hike in customs duties and fiscal slippage to 3.5 per cent in 2017-18 and a higher target for 2018-19.