RBI cuts repo rates to boost growth; lowers GDP growth forecast to 7% in FY20
Reserve Bank of India
The Reserve Bank of India(RBI) today cut repo rate for the third consecutive time this year to 5.75 per cent from the current 6 per cent amid falling economic growth and uncertain global scenario.
The central bank changed its policy stance to accommodativefrom neutral.
The RBI cut interest rates by 0.25 per cent. India's central bank also cut GDP growth forecast for FY20 from 7.2 per cent to 7 per cent.
"The MPC (monetary policy committee) notes that growth impulses have weakened significantly, a sharp slowdown in investment activity along with a continuing moderation in private consumption growth is a matter of concern," the policy resolution said.
The central bankraised inflation projection to 3-3.1 per cent for April-September.
The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das concluded its second meeting for the fiscal year 2019-20. On February 7 and April 4, the central bank had reduced the key lending rate by 25 basis points to infuse liquidity and push growth.
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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 on loans, and lowers equal monthly instalments on home loans, car loans and personal loans.
India's economy grew just 6.8 per cent in 2018-19, according to government data. In the fourth quarter (January to March), the growth dipped to 5.8 per cent, marking a five-year low.