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Assessment of growth, inflation by RBI in line with govt's: Finance Ministry

The government welcomes the assessment made by the RBI's MPC, said Subhash Chandra Garg, Secretary, Economic Affairs.

twitter-logo PTI        Last Updated: December 6, 2018  | 08:15 IST
Assessment of growth, inflation by RBI in line with govt's: Finance Ministry
PC: Reuters

The finance ministry Wednesday said the assessment of growth and inflation made by the RBI's Monetary Policy Committee (MPC) is in line with government's reading.

"The assessment of the MPC for growth and inflation outlook is consistent with the government's assessment of inflation and growth," said Subhash Chandra Garg, Secretary, Economic Affairs, in a statement.

The government, he said, welcomes the assessment made by the MPC.

The RBI has also decided to reduce Statutory Liquidity Ratio or portion of funds banks have to mandatorily park in government securities from existing 19.5 per cent to 18 per cent in six quarterly instalments beginning January 2019.

"This will have some implications for the government securities. However, the momentum created by the reduction in oil prices and reversal of foreign flows has resulted in further moderation of yields post policy announcement," Garg said.

The RBI on Wednesday expectedly kept interest rates unchanged but held out a promise to cut them if the upside risks to the inflation do not materialise.

It also coaxed banks to lend more in order to support the slowing economy.

With all the six member of the MPC voting for a hold on rates, the RBI kept benchmark repurchase (repo) rate at 6.5 per cent.

Having raised rates twice this year, the central bank retained its 'calibrated tightening' policy stance.

"Even as inflation projections have been revised downwards significantly and some of the risks pointed out in the last resolution have been mitigated, especially of crude oil prices, several uncertainties still cloud the inflation outlook," it said in a statement.

Next meeting of the six-member MPC will take place for three days from February 5, 2019.

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