Home > Articles > RBI Monetary Policy Statement Highlights – 4th Bimonthly Policy Updates 2019

RBI Monetary Policy Statement Highlights – 4th Bimonthly Policy Updates 2019

4th Bimonthly Monetary Policy Update 2019

The Monetary Policy Committee of Reserve Bank of India today in its 4th Bimonthly Monetary Policy Update 2019 announced the Policy Rates. RBI has cut the policy Repo Rate for fifth time in a row by 0.25% keeping the Monetary Policy Stance accommodative. RBI has cut the Repo Rate by a total of 135 basis points since February. Let us look at the RBI’s 4th Bimonthly Monetary Policy Update 2019 in detail.

RBI’s six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, announced RBi’s fourth bi-monthly monetary policy for 2019-20 on October 4, 2019, after a three-day-long meeting. All the six members of the MPC voted unanimously to change the policy rates and MPC stance. All members of the MPC voted to reduce the policy repo rate and to continue with the accommodative stance of monetary policy. Dr. Chetan Ghate, Dr. Pami Dua, Dr. Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das voted to reduce the repo rate by 25 basis points. Dr. Ravindra H. Dholakia voted to reduce the repo rate by 40 basis points.

RBI’s 4th Bimonthly Monetary Policy Update 2019

Key Rates

Repo Rate 5.15%
Reverse Repo Rate 4.90%
Marginal Standing Facility (MSF) & Bank Rate 5.40%
Cash Reserve Ratio (CRR) 4%
Statutory Liquidity Ratio (SLR) 18.75%
GDP Forecast for 2019-20 6.1%

RBI’s 4th Bimonthly Monetary Policy Update 2019

Key Highlights 

1. Key Rates

MPC has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.15 per cent from 5.40 per cent with immediate effect. The reverse repo rate has been adjusted to 4.90%. Similarly, the Marginally Standing Facility (MSF) and Bank Rate is 5.40%.

2. Monetary Policy Stance – Accommodative

The MPC also decided to continue with an accommodative stance as long as it is necessary to revive growth while ensuring that inflation remains within the target.

3. Inflation Projection & CPI

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 % while supporting growth.  The Consumer price inflation (CPI) forecast has been retained for the second half of the fiscal year 2019-20 at 3.5-4%.

4. GDP Growth Forecast

The GDP growth forecast has been cut from 6.9% to 6.1% for the ongoing fiscal year 2019-20.

5. Rural and Urban Demand

The MPC noted that the slump in real GDP growth in Q2 was followed by weaker demand. The committee highlighted that the government has announced several measures in the last two months to revive demand. Overall, the RBI Governor Shaktikanta Das stated that the global economy has lost momentum.

Sources: 

  • RBI website
  • Financial Express
  • First Post

Note:

1 Percent = 100 Basis Point (bps)

The minutes of the MPC’s meeting will be published by October 18, 2019. The next meeting of the MPC is scheduled during December 3-5, 2019

This was all from us in this blog of “4th Bi-monthly Monetary Policy Highlights 2019”. We hope you like the content provided.

Mission RBI Grade B 2019 Course – Phase 1 & Phase 2 Preparation | Join Now

Read More:

  1. Monetary Policy of India – A Brief Overview
  2. Fiscal Policy of India – A Brief Overview
  3. Know about Fiscal Consolidation & FRBM Act & Latest Updates
  4. 36th GST Council Meeting Imp. Updates & Functions – RBI Grade B
  5. Types of Risks in Banks – Concepts and Definition
  6. Inflation – Types, Causes, Effects, Indicators – Study Notes for ESI
  7. Bonds – RBI Grade B Study Notes for Finance & Management
  8. Accounting Ratios – RBI Grade B Notes for Finance & Management
  9. Time Value of Money – Finance Notes for RBI Grade B Exam
  10. Poverty Alleviation & Employment Generation – RBI Grade B Study Notes
  11. Corporate Governance in Banking Sector – RBI Grade B Study Notes
  12. Risk Management in Banking Sector – RBI Grade B Finance Notes
  13. Govt. Schemes & Policies Announced – Budget 2019 – Free Ebook
  14. Budget Outlay for Government Schemes – FY 2019-20 – Free Ebook
  15. Union Budget 2019-2020 – Sector-Wise Summary
  16. Economic Survey 2019 Summary – Download Now