New Delhi: In its third bi-monthly monetary policy review, the Reserve Bank of India today declared a 0.25 percent cut in the Repo rate- the rate at which the central bank lends short-term money to banks. Bringing the Repo rate from 6.25 to 6 percent, the loans, after this announcement, are anticipated to get cheaper. The current rate of 6 per cent is the lowest since November 2010.
The announcement of rate cut for the first time in ten months, was made by a six-member monetary policy team headed by RBI governor Urjit Patel.”Inflation has fallen significantly in last three months due to implementation of GST and good monsoon”, said Patel. “There is scope for banks to reduce lending rates. On the state of the economy, the MPC is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all,” he added.
The rate cut was in line with market expectations. The reverse repo rate has been adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the bank rate to 6.25 per cent.