The RBI has kept all its key rates unchanged in the first bi-monthly policy review for the financial year 2018-19 for the fourth time in a row.

The Monetary Policy Committee, MPC, headed by RBI Governor Urjit Patel kept the repo rate at which the central bank lends short-term money to other banks at 6 per cent. The reverse repo, rate at which it borrows from banks and absorbs excess liquidity, will remain at 5.75 per cent.

The status quo policy of RBI will be neutral to the EMIs for housing and vehicle loan borrowers, but banks are free to tinker with both deposit and lending rate depending on their asset liability position.

The decision to maintain status quo was supported by five members of the Monetary Policy Committee, MPC, while one member, Dr. Michael Debabrata Patra, voted for an increase in the policy rate of 25 basis points. 

The next meeting of the MPC is scheduled on 5th and 6th June this year.

RBI Governor Urjit Patel said there are several uncertainties surrounding the baseline inflation path. 

These include the impact of revised formula for Minimum Support Price (MSP) for kharif crops,  house rent allowance revisions by various state governments, fiscal slippages and volatility in crude oil prices. 

RBI has said that overall food inflation should remain under check on the assumption of a normal monsoon and effective supply management by the Government.    

The RBI has said that GDP growth is likely to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19 as there are clear signs of revival in investment activity and improvement in global demand.