The Reserve Bank of India
's (RBI) Monetary Policy Committee (MPC), in its second bi-monthly monetary policy review for 2019-20 has decided to cut the repo rate by 25bps to 5.75% —the lowest in nine years.
On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25bps to 5.75% from 6% with immediate effect, the central bank said in the press note.
Consequently, the reverse repo rate under the LAF stands adjusted to 5.50%, and the marginal standing facility (MSF) rate and the Bank Rate to 6%.
The MPC also decided to change the stance of monetary policy from neutral to accommodative.
These 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 +/- 2% while supporting growth.
Against this backdrop, all members of the MPC (Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Viral V. Acharya and Shri Shaktikanta Das) unanimously decided to reduce the policy repo rate by 25 basis and change the stance of monetary policy from neutral to accommodative.
The next meeting of the MPC is scheduled during August 5 to 7, 2019.