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RBI further cuts repo rate by 25bps to 5.15%

04
Oct '19
RBI Governor Shaktikanta Das addressing Fourth Bi-Monthly Monetary Policy Press Conference 2019-20. Pic: Youtube/RBI
RBI Governor Shaktikanta Das addressing Fourth Bi-Monthly Monetary Policy Press Conference 2019-20. Pic: Youtube/RBI
On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) in its Fourth Bi-monthly Monetary Policy Statement, 2019-20, has reduced policy repo rate under liquidity adjustment facility (LAF) by 25 basis points to 5.15 per cent from 5.40 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands reduced to 4.90 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 5.40 per cent.

"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. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth," the RBI said in a statement.

The MPC noted that the negative output gap has widened further. "While the recent measures announced by the government are likely to help strengthen private consumption and spur private investment activity, the continuing slowdown warrants intensified efforts to restore the growth momentum," the statement added.

With inflation expected to remain below target in the remaining period of 2019-20 and Q1:2020-21, there is policy space to address these growth concerns by reinvigorating domestic demand within the flexible inflation targeting mandate. It is in this context that the MPC decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

Fibre2Fashion News Desk (RKS)


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