RBI says India will grow at 6.7% in 2017-18
The bank kept the repo rate and the reverse repo rate unchanged at 5.75% and 6.25% respectively. Photograph: (Reuters)
The RBI announced Wednesday that it was keeping the repo rate unchanged at 5.75%.
It said that it was also keeping the reverse repo rate unchanged at 6.25%.
And it added that India would grow at 6.7% in 2017-18.
There would it said be an acceleration in growth in the second half, to 7.1% in the third quarter and to 7.7% in the fourth quarter.
Projection of growth of 6.7 % for 2017-18 as a whole is consistent with an acceleration in second half to 7.1% in Q3 & 7.7% in Q4: RBI— ANI (@ANI) October 4, 2017
RBI decides to keep repo rate unchanged,reverse repo rate remains at 5.75% and bank rate at 6.25%— ANI (@ANI) October 4, 2017
The central bank added that inflation is expected to rise from its current levels to between 4.2 to 4.6% in the second half of 2017.
Inflation is expected to rise from its current level& range b/w 4.2-4.6 % in 2nd half of 2017, including house rent allowance by Centre: RBI— ANI (@ANI) October 4, 2017
The bank added that it had revised the country's real Gross Value Added growth projection downwards to 6.7% from 7.3%.
The projection of real Gross Value Added (GVA) growth for 2017-18 has been revised down to 6.7 % from August 2017 projection of 7.3 %: RBI— ANI (@ANI) October 4, 2017
RBI governor Urjit Patel said the RBI expressed concern about the "weakening of the manufacturing sector in the first half of the year."
He added that measures need to be undertaken to encourage growth.
Measures need to be undertaken to support growth&achieve faster closure of output gap incl. restarting stalled investment projects: RBI(1/2) pic.twitter.com/xxAUcHib53— ANI (@ANI) October 4, 2017
Enhancing ease of doing business,including by further simplification of GST; &ensuring faster rollout of affordable housing program-RBI(2/2)— ANI (@ANI) October 4, 2017
And that "factors that have affected growth in the second quarter, some of them will dissipate."
Leaving the repo rate and the reverse repo rate unchanged means there will be no change in people's EMIs.
Commentators said the Reserve Bank of India is at the moment in wait-and-watch mode.
We have just entered the festive season, which is also peak demand season.
This is when people plan large new buys, and also when sellers offer their largest discounts.
The commentators said the RBI would decide in December -- depending on what the figures then say about demand now -- on a change in rates.
Should demand stay low, there might be a downward revision in rates and vice versa.