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RBI leaves key rate unchanged

Although the RBI’s Monetary Policy Committee (MPC) slashed its GDP growth estimate for 2019-20 by 110 basis points to 5% from 6.1% forecast two months earlier, it retained the repo rate at 5.15%.  Despite the country’s subdued growth, the central bank said inflation would be higher than expected, in the range of 4.7% to 5.1%. “However, given the evolving growth-inflation dynamics, the MPC felt it appropriate to take a pause at this juncture,” the panel said in a statement. Commenting on this RBI governor Shaktikanta Das said, “The impact should be optimised and should be maximised, so it’s a question of timing, which is very important, rather than going on mechanically cutting rates on every occasion.”