RBI keeps repo rate unchanged, tweaks SLR

In-line with the street expectation the Reserve Bank of India has left key policy rate unchanged but has lowered SLR by 25 bps. The apex bank has maintained its stance of calibrated tightening at the end of the fifth bi-monthly review that ended on Wednesday.

The Monetary Policy Committee (MPC) maintained the repo rate at 6.50 per cent, reverse repo rate at 6.25 per cent while maintaining the GDP estimate for FY19 at 7.4 per cent. RBI Governor Urjit Patel expressed that falling crude oil price may boost consumption and corporate earnings and imparts a downward bias to the inflation rate.
RBI cut the Statutory Liquidity Ratio (SLR), which is the portion of deposits held by banks in government securities, by 25 bps to 19.5 per cent. This move will free-up over Rs. 57,000 crore, providing banks the much need liquidity. RBI added that SLR rate would be cut by 25 basis bps every quarter.
Speaking on the calibrated tightening stance, the governor said that RBI has retained the stance to buy time to pause, review and draft future policies in the presence of more strong inflation signals.

Meanwhile, the BSE Sensex closed at BSE Sensex was at 35,884.41, down by 249.90 points or 0.69 per cent, Nifty50 was at 10,784.95, down by 84.55 or 0.74 per cent on Wednesday.