RBI monetary policy review: Repo rut cut again, by 25 bp to 5.15%

In a major decision on Friday, Reserve Bank of India (RBI) has cut repo rate by 25 basis points. In bi-monthly policy anuncement, RBI, for fifth consecutive time, has cut repo rate and justed reserve repo rate and bank rate. From 5.40% earlier, RBI has decided to keep repo rate at 5.15%. ditionally, RBI has decided to keep  Reverse repo rate to 4.90% and bank rate at 5.40 %, accordingly. Making anuncement on October 4, RBI goverr Shaktikanta Das has also said that RBI will maintain an accommodative policy stance with a view to revive growth. Bringing repo-rate down to a six-year low, RBI said that  reduction was necessary to revive growth. With first-quarter GDP growth plunging to 5 percent, RBI cut its estimate of ecomic growth in current fiscal to 6.1 percent from its earlier estimate of 6.9 percent.

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Decisions taken by bank last month: 

Earlier in August,  Reserve Bank cut key interest rates for fourth consecutive time, as it reduced repo rate by 35 basis points to 5.40 percent to boost slowing ecomy. six-member monetary policy committee (MPC) also maintained accommodative stance on monetary policy. ting that inflation is currently projected to remain within target over a 12-month ahe horizon, MPC said since last (June) policy, domestic ecomic activity continues to be weak, with global slowdown and escalating tre tensions posing downside risks.

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It said that even as past rate cuts are being grually transmitted to real ecomy, benign inflation outlook provides heroom for policy action to close negative output gap. This is fourth consecutive time that RBI has reduced repo rate. In earlier three policies, it has reduced repo rate by 25 basis points each. RBI also revised real GDP growth for 2019-20 downwards to 6.9 percent from 7 percent in June policy. CPI inflation is projected at 3.1 percent for second quarter of FY20 and 3.5-3.7 percent for second half of FY20, with risks evenly balanced.

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