RBI cuts repo rate by 25 basis points, eases stance

The Reserve Bank of India has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19.

The Reserve Bank of India has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19.
 
The Reserve Bank of India, led by Governor Shaktikanta Das, has cut the repo rate by 25 basis points in its sixth bi-monthly monetary policy statement for 2018-19, changing its stance to 'neutral' from 'calibrated tightening. The three-day policy review meeting by the Monetary Policy Committee (MPC) began in Mumbai on Tuesday. The MPC is headed by RBI Governor Shaktikanta Das. In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent and the reverse repo rate at 6.25 percent.
 
According to media reports, most economists had predicted that the repurchase rate would probably be kept steady at 6.5 percent, as per 32 of the 43 economists surveyed by Bloomberg as of Wednesday. The rest expected a 25 basis-point reduction. Real interest rates in India are among the highest in Asia, and there had been a growing demand for the first cut in the policy rate since August 2017.
 
The policy text said: 
 
On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to: 
 
reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect.
 
Consequently, the reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 per cent. 
 
The MPC also decided to change the monetary policy stance from calibrated tightening to neutral.
 
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth. 
 
Source: Media reports

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