Home Business RBI cuts repo rate by 25 bps to 6%

RBI cuts repo rate by 25 bps to 6%

Mahesh Kumar Jain

In line with market expectations, the Reserve Bank of India on Wednesday in its 3rd bi-monthly monetary policy decision of FY 2017-18 reduced the Repo Rate under the Liquidity Adjustment Facility by 25 basis points from 6.25 percent to 6.0 percent.

The reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.

As per information received, in the wake of record low retail inflation, the monetary policy committee (MPC) headed by RBI Governor Mr. Urjit Patel slashed policy repo rate by 25 basis points to 6 per cent and reverse repo by a similar proportion to 5.75 per cent in its third Monetary policy review in Mumbai on Wednesday.

The MPC also decided to keep the policy stance neutral in consonance with the objective of achieving the medium-term target for consumer price index inflation of 4 per cent. Despite a cut in the benchmark lending rate, RBI retained its GDP forecast to 7.3 per cent.

According to RBI governor, the MPC observed that while inflation has fallen to a historic low, a decisive segregation of transitory and structural factors driving the disinflation is still elusive.

He emphasized that he MPC remains focused on its commitment to keep headline inflation close to 4 per cent on a durable basis.

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