RBI Repo Rate Cut

Lowest repo rates since March 2010:

RBI slashed repo rates – the short term lending rate by 25 basis points. The MPC (Monetary Policy Committee) comprising of six members took the decision in its fourth bimonthly policy review as “it is necessary to revive growth, while ensuring that inflation remains within the target.”

Repo rate stands at 5.15 percent now.

All the members voted in favor of the cut. The domestic stock market saw a fall and BSE Sensex saw a rise of 66 points after the announcement.      

This rate cut was very much expected. Some analysts were expecting a surprise in rate cut of 35-40 basis points since RBI reduced the GDP growth estimate from 6.9 percent to 6.1 percent in the financial year 2020.

Retail inflation of 3.21 percent for August, ban on onion exports easing spike in food inflation, volatile global trade scenario and uncertain geopolitical environment are the reasons that supported the rate cut.