TIL Desk/Business/Mumbai/ After a 10-month pause, the Reserve Bank on Wednesday cut benchmark lending rate by 0.25 per cent to over 6-year low citing reduction in inflation risk, a move that will lower interest on home, auto and corporate loans. The repo rate, at which RBI lends to banks, is now down to 6 per cent, the lowest in more than six-and-a-half years.
The reverse repo, at which RBI borrows from banks, has been readjusted accordingly by similar percentage point to 5.75 per cent. The marginal standing facility (MSF) rate and the Bank Rate have also come down to 6.25 per cent.
RBI had last cut the key lending rate by 0.25 per cent in October 2016 monetary policy, Urjit Patel’s first as RBI Governor. That was also the first monetary policy which was decided by Monetary Policy Committee (MPC).
“The decision of the MPC is consistent with a neutral stance of monetary policy 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,” Patel said after the third monetary policy review of the current fiscal by the 6-member MPC. Despite a cut in the benchmark lending rate, RBI retained its GDP forecast to 7.3 per cent.
