The Reserve Bank of India (RBI,) on the 4th of October, announced a reduction in repo rate (money lending rate) for the commercial banks in India.
The RBI Monetary Policy Committee (MPC,) after its Fourth Bi Monthly Press Conference 2019-2020, said the RBI will reduce the repo rate to 5.15 %. However, the reverse repo rate, which is the rate at which RBI borrows money from banks, stood at 4.90 %.
The RBI’s announcement will help the banks give loans to investors and private firms who can invest in industries, boosting the economic situation of India.
The Gross Domestic Profit (GDP) forecast was also revised and cut to 6.1 %, from the existing 6.9 % in the fiscal year 2019-2020. All the 6 members of the MPC voted for a rate cut of 25 bps.
Apart from this, the RBI will continue with its accommodative monetary stance to revive the economy.
With the slashing of the repo rate, consumers are also expected to get a reduction in interest rates on home, personal and other kinds of loans from banks.
Shaktikanta Das, the Governor of the RBI, concluded the conference and said, “These are decisions are in consonance with the objective of achieving the medium term target for consumer price index (CPI) inflation of 4 % within a band of positive/ negative 2 %, while supporting (the) growth. (sic.)”
The next Bi Monthly MPC Press Conference is scheduled to be held between the 3rd of December and 5th of December 2019.
Stay tuned for further updates.