TIL Desk/Business/Mumbai/ Home and auto loans are set to become cheaper as the Reserve Bank of India (RBI) went for a hat-trick of rate cut on Thursday as it lowered its key lending rate for commercial banks by 25 basis points (bps) to 5.75 per cent.
This is the third reduction in the repo rate in 2019. The RBI in April lowered its key lending rate by 25 bps to 6 per cent. Before that, in February, the MPC had voted to lower the repo rate by 25 bps to 6.25 per cent. Besides, the RBI changed the monetary policy stance from neutral to accommodative.
The significance of such a move can be gauged by the fact that the RBI has reduced its growth forecast to 7 per cent in 2019-20 from 7.2 per cent. Additionally, RBI Governor Shaktikanta Das said that the central bank would make sure that the transmission of the reduced repo rate would be faster and higher.
In the absence of complete transmission of lower lending rates, consumers pay higher EMI while corporates’ repayment burden remain high. The decision to reduce the repo rate was taken by the RBI’s Monetary Policy Committee (MPC) at its second monetary policy review of the ongoing fiscal.
