The Board said it arrived at this decision following a careful analysis of current and expected developments in the domestic and global economy and the domestic financial market, with the broad aim of stabilizing inflation at mid-single digit levels in the medium term to enable the economy to reach its potential.

Headline inflation decelerated below the desired mid-single digit levels, largely driven by the decline in volatile food prices. The Bank expects the headline inflation is projected to remain in low single digit levels during the remainder of the year and is expected to be maintained in the targeted range of 4 - 6 per cent during 2019 and thereafter with appropriate policy adjustments.

The expansion in import expenditure continued to outpace the growth in export earnings during the first nine months of 2018 leading to a wider trade deficit than in the corresponding period in the previous year. However, a slowdown in import expenditure is expected in the period ahead in response to the recent measures adopted as well as the depreciation of the rupee against major currencies.

As per the available economic indicators, real GDP growth is likely to remain subdued and below the envisaged levels in 2018, the Central Bank projected.