RBI was Expected to Cut Repo Rate...And it Came Through
| Rohit – Copy Editor cum Reporter – IOP, Delhi - 07 Jun 2019

New Delhi, June 7, 2019: The Reserve Bank of India (RBI) went for a hat-trick of rate cut on Thursday as it lowered its key lending rate for commercial banks by 25 basis points (bps) to 5.75 per cent.

''RBI’s decision to cut repo rate was widely expected.The decision to change the stance to accommodative from neutral is important in the context of slowing global and domestic economic growth. Change in stance signals that the Central Bank keeps scope open for further rate cuts in the near future if the economy so warrants. The policy also has broad indication of more action on the liquidity front,'' says S.S. Mallikarjuna Rao, MD & CEO of Allahabad Bank.

This is the the third reduction in repo rate in 2019. The RBI in April lowered its key lending rate by 25 bps to 6 per cent. Before that, in February, the MPC had voted to lower the repo rate by 25 bps to 6.25 per cent.

Besides, the RBI changed the monetary policy stance from neutral to accommodative. The significance of such a move can be gauged by the fact that the RBI has reduced its growth forecast to 7 per cent in 2019-20 from 7.2 per cent.

Additionally, RBI Governor Shaktikanta Das said that the central bank would make sure that the transmission of the reduced repo rate would be faster and higher.

Imagecredit:Deccan Chronicle

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