RBI lowers GDP growth to 7.1%; inflation pegged at 5%

Demonetisation to result in short-run disruptions in cash-intensive sectors like retail, hotels, restaurants and transportation, RBI said while announcing the Monetary Policy

Much has changed since the last monetary policy review on October 4. The risks to growth have risen since, but those to inflation have declined. With demonetisation in full swing, the clamour for a rate cut was strong.

But going against market expectation, Reserve Bank of India kept the repo rate unchanged at 6.25 per cent, as all six members of the Monetary Policy Committee voted in favour of a status-quo.

Highlights of the Monetary Policy:

• Withdrawal of old notes could result in temporary reduction in inflation by 10-15 basis points in third quarter: RBI.

• Retail inflation to be 5 per cent in fourth quarter of current fiscal.

• RBI lowers GDP growth estimate to 7.1 per cent in 2016-17 from earlier projection of 7.6 per cent.

• Monetary stance remains accommodative, says RBI.

• Demonetisation to result in short-run disruptions in cash-intensive sectors like retail, hotels, restaurants and transportation.

More details soon...