RBI Repo Rate cut by 25 bps to 6%; Shaktikanta Das continues trend

The Reserve Bank of India (RBI) slashed the policy repo rate by another 25 basis point in first bi-monthly monetary policy of FY20. Now policy repo rate stands at 6% from previous 6.25%. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25%. RBI governor Shaktikanta Das also maintained neutral monetary policy stance. 

This decision to cut RBI repo rate is in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth. 

Rationalizing its decision RBI said, "The MPC notes that the output gap remains negative and the domestic economy is facing headwinds, especially on the global front. The need is to strengthen domestic growth impulses by spurring private investment which has remained sluggish."

The MPC decided to not just reduce the policy repo rate by 25 basis points, but also maintained the neutral stance of monetary policy.

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Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favour of the decision to reduce the policy repo rate by 25 basis points. Dr. Chetan
Ghate and Dr. Viral V. Acharya voted to keep the policy rate unchanged. 

Now the  minutes of the MPC’s meeting will be published by April 18, 2019.

Apart from this, the next meeting of the MPC is scheduled during June 3, 4 and 6, 2019.