Following the 3 day deliberations on the monetary policy review, Reserve Bank of India has released the Fifth Bi-monthly Monetary Policy Statement (2018-19) on their official website, maintaining the status quo.
The statement released by the RBI said, “On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to: keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent.”
“Consequently, the reverse repo rate under the LAF remains at 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.” the Reserve Bank added.
However, in order to align the Statutory Liquidity Ratio (SLR) with the Liquidity Coverage Ratio (LCR) requirement, RBI proposed to reduce the SLR by 25 basis points every calendar quarter until the SLR reaches 18 per cent of Net Demand and Time Liabilities (NDTL). The first reduction of 25 basis points will take effect in the quarter commencing January 2019.
Overall, the decision of the MPC is in line with the expectation of the investors, hence no major effect on the market has been seen. Earlier, the stock market discounted itself in anticipation today.