The constant variations in global economy and rising inflation have led RBI to keep the policy rates unchanged while presenting the first bi-monthly policy for the fiscal year 2018-19. The Reserve Bank had kept the repo rate constant at 6% in the last review because of the fiscal imprudence, rising crude oil prices and uncontrolled HRA (Housing Rent Allowance) implementation.
The meeting was held on 4th April, by a six-member committee of Monetary Policy, including the RBI Governor Urjit Patel.
Since the last review on the Monetary Policy, the international crude oil rates have been increased, following which the oil companies hiked the diesel prices to an all-time high level and petrol prices to a 5-year high level.
The policy decision of RBI depends upon the CPI (Consumer Price Index) and the factors that influence it. There was a 5.07% growth rate in CPI in Jan 2018. It was at a 17-month high rate of 5.21% earlier and recorded at 4.44% in Feb 2018. RBI monitors the cash flow needed to control inflation, exchange rates and banking & financial institutions in order to arrive at a decision on the monetary policy. The government’s aim is to achieve the CPI at 4% by 2020.