RBI lowers GDP outlook to 6.1% and cuts repo rate by 25 bps

The Reserve Bank of India’s Monetary Policy Committee (MPC) once again slashed key repo rate by 25 basis points. This is the fifth time that the committee revised the repo rate this year.

The repo rate or the rate at which RBI lends to banks has been revised to 5.15 per cent from 5.40 per cent. Likewise, the reverse repo rate has been adjusted to 4.90 per cent.

All the members of RBI’s MPC voted unanimously to reduce repo rate and maintain an accommodative stance with regards to monetary policy.

All members of the MPC voted to reduce the policy repo rate and to continue with the accommodative stance of monetary policy. One MPC committee member, Ravindra H. Dholakia, had voted to reduce the repo rate by 40 basis points.

The 25 bps rate cut is in line with the predictions of economists, in line aimed to boost demand and private consumption amid the economic slowdown.

The RBI Governor, Shaktikanta Das had earlier given a strong indication that the central bank would be inclined towards cutting rates further as inflation continues to remain under its medium-term target of four percent.

The move is suppose to bring down interest on home loans.

In the previous bi-monthly meeting of the MPC in August resulted in the repo rate by 35 bps.

The central bank has reduced the GDP growth outlook for 2019-20 to 6.1 per cent from 6.9 percent and revised the GDP outlook for the year 2020-21 has been revised to 7.2 per cent.

Source : Various