Mumbai:7/8/19:Reserve Bank of India (RBI) has cut repo rate by 35 basis points to 5.40 per cent to give a fillip to the economy. This is the fourth consecutive time that the Monetary Policy Committee has reduced the rates. In the earlier three policies, RBI had reduced repo rate by 25 basis points each.
Consequently, the reverse repo rate under the liquidity adjustment facility stands revised to 5.15 per cent, and the marginal standing facility rate and the Bank Rate to 5.65 per cent. In its third bi-monthly policy announced today, RBI has decided to maintain the accommodative stance of monetary policy.
Repo rate is the rate at which RBI lends to banks generally against government securities while the reverse repo is the rate at which RBI borrows money from the banks. Both these rates are key determinants for customers availing loans from banks.
RBI Governor Shaktikanta Das said the Central bank has been pre-emptive in its actions on rates. He said RBI has always provided adequate liquidity to the system.
On the inflation front, RBI has informed that actual headline inflation for first quarter of 2019-20 stood at 3.1 percent and in alignment with the Committee’s projections of 3-3.1 percent inflation figure for first half of the current financial year.
While marginally lowering its GDP growth forecast for current fiscal to 6.9 percent from 7 percent as previously predicted, RBI has said the base effect of policy transmission will turn favourable only in the second half of 2019-20.