As RBI keeps key lending rates unchanged, FinMin welcomes monetary policy assessment

The Finance Ministry of India has said that the assessment of growth and inflation made by the Monetary Police Committee (MPC) of Reserve Bank of India (RBI) is in line with the government’s reading.

RBI also stated that there has been increasing signs of weakness in global economic activity. (Image: PTI)

New Delhi: In a recent update, the Finance Ministry of India has said that the assessment of growth and inflation made by the Monetary Police Committee (MPC) of Reserve Bank of India (RBI) is in line with the government’s reading. Headed by RBI Governor Urijit Patel, the MPC has kept the key lending rate unchanged. As per a report by news agency PTI, the committee has also retained its Gross Domestic Product (GPD) growth projection of the current fiscal at 7.4 per cent and expects to maintain the inflation below the mid-term target of 4 per cent. Expressing satisfaction towards MPC assessment, Secretary of Economic Affairs Subhash Chandra Garg stated the government welcomes the review made by the MPC. “The assessment of the MPC for growth and inflation outlook is consistent with the government's assessment of inflation and growth,” Garg was quoted by the news agency as saying. As per the report, the Central bank has also decided to reduce Statutory Liquidity Ratio or portion of funds banks have to mandatorily park in government securities from existing 19.5 percent to 18 percent in six quarterly installments beginning January 2019. “This will have some implications for the government securities. However, the momentum created by the reduction in oil prices and reversal of foreign flows has resulted in further moderation of yields post policy announcement,” Garg informed further. Next meeting of the six-member MPC will take place for three days from February 5, 2019. The MPC has also retained its GDP forecast for the current fiscal at 7.4 per cent and even claimed that the growth will further move to 7.5 per cent in the first half of 2019-2020. This is due to the sudden surge in the investment activity across various business sectors. The Central bank also stated that there has been increasing signs of weakness in global economic activity on the backdrop of rising trade tensions. Change in international Crude oil prices, rising policy rates in the US and expectations of slowdown have highly impacted the global finance markets.