New Delhi: The Reserve Bank of India (RBI) on Friday lowered the repo rate by 25 basis points to 5.15 per cent. The decision was announced after the 3-day meeting of the Monetary Policy Committee (MPC), headed by RBI governor Das, which began on Tuesday. Notably, repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers and lowers equal monthly instalments on home loans, car loans and personal loans.
Further, the Reserve Bank’s MPC continued its accomodative stance. “The MPC also decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target,” the policy statement said.
Meanwhile, with today’s rate cut, the Central Bank has lowered its repo rate for the fifth consecutive time this year. Earlier it had slashed repo rate four times consecutively amounting to 110 basis points in aggregate.
At its last meeting in August, the Monetary Policy Committee (MPC) reduced the benchmark lending rate by an unusual 35 basis points to 5.40 per cent.
Ahead of the MPC meeting, the Shaktikanta Das-headed Financial Stability and Development Council (FSDC) sub-committee took stock of the prevailing macroeconomic situation. Earlier, the RBI Governor had said that the government has little fiscal space, giving hope that the central bank may provide more monetary stimulus to prop up the economy.
The government”s fiscal space has been squeezed on account of cut in rates of corporate tax as well as lowering of GST rate on various goods. Revenue collection too has been below the Budget estimates.