The Reserve Bank of India cut benchmark lending rate by 0.25 per cent to 6.25 per cent on expectation of inflation staying within its target range, a move that may make home and other loans cheaper. The RBI, under its new Governor Shaktikanta Das, changed the monetary policy stance to ‘neutral’ from the earlier ‘calibrated tightening’, signalling further softening of rates if inflation remain benign.
With Deputy Governor Viral Acharya and another member Chetan Ghate voting for a status quo, Das and three others outvoted them for reduction in repo rate to 6.25 per cent from the existing 6.50 per cent. Accordingly, reverse repo was reduced to 6 per cent from 6.25 per cent.
Repo rate is the rate at which commercial banks borrow money from the RBI; while reverse repo rate is the rate at which RBI collects money from banks.
The RBI expects GDP growth to be at 7.4 per cent in FY20, which is up from the 7.2 per cent estimated for FY19 by the CSO.
RBI’s Policy Rates:
|Policy Repo Rate||: 6.25%|
|Reverse Repo Rate||: 6.00%|
|Marginal Standing Facility Rate||: 6.50%|
|Bank Rate||: 6.50%|