Highlights of the RBI's sixth bi-monthly monetary policy announced today

Following are the highlights of the sixth bi-monthly monetary policy announced by RBI: * Policy repo rate unchanged at 6.25 percent. * Economic growth for FY17 lowered to 6.9 percent; RBI pegs it at 7.4 percent in 2017-18. [caption id=“attachment_3272636” align=“alignleft” width=“380”]  Reuters[/caption] * Growth is expected to recover sharply in 2017-18. * Retail inflation in Q4 likely to be below 5 percent. * Inflation projected in the range of 4-4.5 percent in the first half of 2017-18 and 4.5-5 percent in the second half. * Upside risks to inflation - rise in crude oil prices, volatility in exchange rate, and fuller effect of the 7th Pay Panel. * Global growth projected to pick up modestly in 2017. * Global trade remains subdued due to increasing tendency towards protectionist policies. * RBI changes policy stance from ‘accommodative’ to ’neutral’. * Monetary Policy Committee (MPC) shifts policy stance to neutral keeping in mind transitory effect of demonetisation. * Surplus liquidity to fall with progressive remonetisation; abundant liquidity with banks may persist in early 2017-18. * High frequency indicators point to subdued activity in services sector, automobile sales, domestic air cargo, railway freight traffic, and cement production. * Steel consumption, port traffic, international air freight, foreign tourist arrivals weathered effect of demonetisation. * Excluding food and fuel, inflation has been unyielding at 4.9 percent since September. * Makes case for faster resolution of NPAs and hastening recapitalisation of banks for lower lending rates. * The next meeting of the Monetary Policy Committee on April 5-6.