Reserve Bank of India (RBI) 25 basis points cut in repo rate

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points in the last two-month review of the current financial year.

This was the first monetary policy review meeting under the chairmanship of the Governor of India, Dakshakti (Shaktikanta Das). MPC has also made its policy approach “neutral” with “strict”. 

In the 6-member Monetary Policy Review (MPC) meeting, a decision to reduce the key policy rate repo from 6.50% to 6.25% was decided by a vote of 4-2. The RBI governor voted in favor of reducing the repo rate. Explain that the repo rate is the rate at which other banks borrow from the central bank. 

At the same time, the reverse repo rate has been cut by 25 basis points, which has decreased from 6.25% to 6%. The reverse repo rate is the rate at which the banks receive interest on their deposits in the RBI on their behalf. 

Let it be said that this is the first cut in repo rate after August 2017. In August 2017, the repo rate was cut by only 25 basis points.

In addition to the repo rate, the RBI has reduced the estimated inflation to 2.8% for the March quarter. In the first half of the financial year 2019-20, the inflation rate is expected to be 3.2-3.4%. Also, in the third quarter of the financial year 2019-20, the inflation rate is estimated to be 3.9%. While the estimated growth rate of 7.4% for the year 2019-20 has been released.

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