RATE SET, PAUSE

RBI Keeps Repo Rate Unchanged, Leaves Door Open For Future Cuts.

The six member monetary policy committee (MPC), headed by RBI Governor Shaktikanta Das. All the members of the MPC voted in favor  to keep the policy repo rate unchanged at 5.15 per cent. The RBI, however revised its outlook for growth and inflation. The central bank revised down its 2019-20 growth forecast to 5 percentage from 6.1 percentage in the October policy review. RBI however revised its outlook for growth and inflation. 

It was revised in the second half of 2019-20 from 3.5- 3.7 percentage 5.1-4.7 percentage. The GDP growth for the second quarter came in at 4.5% the lowest since march 2012 to 13. According to the recently released official data, the rise in food inflation in Q for FY 20 suppose to be very high and it would start easing from February. 126

RBI governor said that the monetary policy and fiscal policy continue to work in coordination to achieve the best result in the national endeavor to revise growth. The monetary policy committee acknowledge that there is space of monetary policy action in the future, while maintaining an accommodating stance. The analyst says that RBI has now taken a pause tolet the banks completely transmit the earlier reduction the the customer first. the "transmission of interest rate has not happened yet which could be one of the reasons RBI waited to cut rates and nudged the government and banks to take effort from their end", Jimeet Modi, founder and CEO, SAMCO Securities and Stock Note. The RBI has done cutting down of cumulative rates by 135 bps or 5 times in a row since February. MPC felt that there was a need to optimize the impact of rate reduction. 200

the slowdown in manufacturing activity was also reflected in the decline in capacity utilization to 8.9% Q FY 20 from 73.6% in Q 1 in the earlier result of reserve bank order books inventories and capacity utilization survey, the statement said. cement is one crucial segment that indicates demand for construction and infrastructure like roads highways or metro projects.

Annual retail inflation rose to 4.62% in October, climbing above 4% for the first time in 15 months and up from 3.99% in September. Analyst believes that transint factors were to blame, so the central bank still has to continue cutting rates in the future.

The September industrial output to contracted 4.3%, following a decline of 1.4% in august. At its policy review in October, the RBI sharply lowered its growth projection for 2019-20.