The Monetary Policy Committee (MPC), in its first bi-monthly policy decision of this fiscal, has revised the inflation projection for H1FY20 at 2.9-3.0 percent, down from 3.2-3.4 percent projected earlier. In the second half of FY20, the committee projected inflation level at 3.5-3.8 percent.
The MPC noted that inflation in the current fiscal will be shaped by many factors. Low food inflation seen during the January-February period is likely to impact the near-term inflation outlook. The fall in fuel group inflation at the time of February policy decision will also have a bearing.
As the Consumer Price Index (CPI) inflation levels in February were lower than expected, the revision has been downwards. Crude oil prices have also gone up 10 percent since the previous policy meet.
The Reserve Bank of India cut the repo rate by 25 bps, from 6.25 percent to 6 percent, in the MPC meet. The GDP projection for 2019-20 is kept at 7.2 percent, down from earlier projection of 7.4 percent.