RBI Review and Outlook for the Quarter

Updated: Sep 13, 2019

The Reserve Bank of India met for its quarterly review and outlook on October 4th 2017. Overall a positive review across advanced development regions like the US and the Europe was mentioned. For India mostly teething issues from recently implemented Demonetization efforts and the unification of taxes through Goods and Service Tax (GST) were in focus. Subsidy to farm loans and industry wise developments from Quarter 1, through to Q3 can be found at recent RBI press release.

Going forward the outlook was projected on the lower side, in terms of increased inflation targets (increase from earlier 3% projected for Q2 to 4.0-4.5 percentage for the second half of 2017). The projection of real GVA (Gross Value Added) growth for 2017-18 was revised down to 6.7% from the August 2017 projection of 7.3%, with risks evenly balanced. Given increased inflation across other regions including India the headline rates were kept unchanged. Current rate decisions are as follows:

Policy Repo Rate: 6.00%

Reverse Repo Rate: 5.75%

Marginal Standing Facility Rate: 6.25%

Bank Rate: 6.25%

The decision to hold rates unchanged was supported in 5:1 ratio of acceptance within the RBI council members. Inflation will be targeted at 4% for the rest of the year.

How will this all impact the common man?

In summary, we will see increased prices for the consumers, overall, and a reduction in savings for purchasing purposes in-spite of improved salaries across the board within the nation, for the second half of 2017. In addition, much hated recent changes like the GST will continue to hold going forward with further better understanding also adding to slight increase in the prices of goods and services. Reduced rates will mean move of investments from fixed deposits to more volatile and risky investment options like the stocks and mutual funds.