At today's Monetary Policy Committee review meet, the Reserve Bank of India decided to stick to a 6 percent repo rate. The review was mainly in line with several expert opinions that had backed a status quo. GDP number in October came in at 6.3 percent, as against 5.7 percent that came in June.
Inflation also rose to 3.58 percent in October compared with 3.28 percent earlier. The monetary policy committee took a cautious note of the macroeconomic indicators. Out of six members, one memebr voted in favour of a 25 basis points rate cut.
Despite some improvement, construction sector growth remained tepid due to transitory effects of the RERA and GST implementation. Growth in the trade, hotels, transport and communication sub-group remained resilient, in spite of some slowdown in growth in Q2 as compared with the previous quarter.
On the expenditure side, the growth of gross fixed capital formation improved for the second successive quarter. However, growth in private final consumption expenditure – the mainstay of aggregate demand – slowed to an eight-quarter low in Q2.
The RBI said: Dr Chetan Ghate, Dr Pami Dua, Dr Michael Debabrata Patra, Dr Viral V Acharya and Dr Urjit R. Patel were in favour of the monetary policy decision, while Dr Ravindra H Dholakia voted for a policy rate reduction of 25 basis points. The minutes of the MPC’s meeting will be published by December 20, 2017.
The next meeting of the MPC is scheduled on February 6 and 7, 2018.