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After the 2nd Bi-monthly Policy, the Reserve bank of India has released RBI’s 3rd Bi-Monthly Monetary Policy 2019-20 on 7th August 2019. The MPC meeting was held for 3 days from 5th to 7th August 2019.
The major decision taken by Monetary Policy Committee headed by Dr. Shaktikanta Das, was 35 bps cut in Repo rate, bringing it down to 5.40% from previous 5.75% in order to maintain its accommodative stance on the policy.
All the six members of Monetary Policy Committee were in favour of reduction in policy repo rate of 35 basis points under the liquidity adjustment facility (LAF).
Key Changes: Repo Rate Cut Down by 35 basis point- Check Major Changes here
Based on the assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee decided to make following changes:
Reduces the Repo Rate by 25 basis point.
Reverse Repo Rate cut by 0.25 percent to 5.75 percent from 6 percent.
The marginal standing facility (MSF) rate and the Bank Rate stands at 6.25 per cent.
Cash Reserve Ratio (CRR) remains unchanged at 4%.
Know more about RBI Governors: A complete list of the past and present governors [UPDATED]
| Key Rates after RBI’s Third Bi-Monthly Policy 2019-20 |
|||
| S. No. |
Instruments |
Past Rates |
Current Rates |
| 1. |
Repo Rate |
5.75% |
5.40% (Reduced by 35 basis points) |
| 2. |
Reverse Repo Rate |
5.50% |
5.15% (Reduced by 35 basis points) |
| 3. |
Cash Reserve Ratio (CRR) |
4% |
4% (Unchanged) |
| 4. |
Bank Rate |
6% |
5.65% (Reduced by 35 basis points) |
| 5. |
Marginal Standing Facility (MSF) |
6% |
5.65% (Reduced by 35 basis points) |
| 6. |
Statuary Liquidity Ratio (SLR) |
19% |
18.75% (Reduced .25 basis points) |
Get the details of Key Policy Rates- Important Banking Terms!
Key Takeaways from RBI’s Third Bi-Monthly Monetary Policy Statement 2019-20
Below are the key highlights of the RBI’s third Bi-Monthly policy 2019-20.
1. The Central Bank (Reserve Bank of India) projected the retail inflation at 3.1% for the September 2019 quarter and 3.5-3.7% for October-March 2019-20 quarter.
2. The RBI’s MPC committee has decided to cut Gross Domestic Product (GDP) growth forecast to 6.9% from 7% for fiscal year 2020.
3. The consumption and Investment have been slowed down, which is causing a dampening effect on growth.
4. RBI also warns that construction sector, the country’s largest jobs provider, activity has weakened in India.
5. RBI had cut the policy rate of 75 previously within last three bi-monthly policy meetings, which are rate cut of 25 bps each in February, April and June.
6. The current state of Indian Economy and Indian Banking System need to revive private investment and remove infrastructure bottleneck.
7. RBI is working to resolve large NPAs and recapitalize Public Sector banks.
8. The Retail inflation, which is led by softening of food prices, fell to a more than five-year low.
9. Some of the risks such as High core inflation (Excluding food and fuel prices), poor rains, adverse impact of Goods and services Act (GST) have not been shown up yet.
RBI Calendar for RBI Bi- Monthly Monetary Policy 2019-20
RBI announces six Bi- monthly policies in a year in the months of February, April, June, August, October, and December to decide the monetary rates which affects Indian Economy. Below is the RBI Calendar 2019 for Monetary Policy 2019-20.
| RBI Policy Statement |
Date of Release |
| First Bi-monthly Monetary Policy Statement for 2019-20 |
20th April 2019 |
| Second Bi-monthly Monetary Policy Statement for 2019-20 |
20th June 2019 |
| RBI’s Third Bi-monthly Monetary Policy Statement for 2019-20 |
21st August 2019 |
| To be Noted |
|
The Minutes of MPC’s meeting will be published on 21st August 2019. The next meeting of the MPC is scheduled from 1st Oct to 4th October 2019.
|
Suggested Reads:
RBI’s 2nd Bi-Monthly Monetary Policy Review 2019-20 [Highlights]
Highlights of RBI’s first Bi-Monthly Monetary Policy Review 2019-20
RBI’s Sixth Bi-monthly Monetary Policy Review, Key Rates Kept Unchanged
In this article, we have summed up all the details of RBI’s Third Bi-Monthly Monetary Policy Statement 2019-20.
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