RBI first bi-monthly monetary policy for FY19: Urjit Patel offers no respite to borrowers, keeps interest rates unchanged

New Delhi: The Reserve Bank of India (RBI), in its first bi-monthly monetary policy for FY19, kept the key rate on hold for the fourth straight time on Thursday.

The 6-member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, favoured pausing the Repo Rate at 6 percent and the Reverse Repo Rate at 5.75 percent. Five out of the  6-member MPC voted in favour of the rate pause.

The Central Bank retained its "neutral" stance, seeking to support a slowing economy. RBI has held the repo at 6 percent since a 25 bps cut in August, having taken advantage of a period of extraordinary low inflation to cut rates by 200 bps since early 2015.

Official data has revealed that retail inflation based on the Consumer Price Index (CPI) in February fell to 4.44 percent, from 5.07 percent in January, but remained outside the RBI medium-term target of 4 percent.

RBI has lowered inflation projection for 2018-19 to 4.7-5.1 percent in first half and 4.4 percent in H2. GDP growth has been projected to strengthen to 7.4 percent in FY19, from 6.6 percent in 2017-18; 7.3-7.4 percent in H1 and 7.3-7.6 percent in H2, RBI said.

India's manufacturing sector activity fell to a five-month low in March, as new business orders rose at a slower pace, and firms showed little appetite for recruitment, says a monthly survey. This is the eighth consecutive month that the index remained above the 50-point-mark.

In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. Eight infrastructure sectors grew by 5.3 percent in February, mainly helped by a robust performance of refinery products, fertiliser and cement segments.The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had grew by just 0.6 percent in February 2017. The core sectors expanded by 6.1 percent in January.