The Indian Wire » Banking » RBI announces rate cut, interest on loans expected to go down

RBI announces rate cut, interest on loans expected to go down


Keeping in view the Benign food inflation, and the continuously surging core inflation- Non-food and non-fuel component of inflation, the Reserve Bank of India on toady announced a 25 bps cut in the Repo rate-the rate at which RBI lends money to other banks, pegging the Repo rate at 6.25%.

This Rate cut came as a surprise because the earlier released SBI ECOWRAP report stated that MPC may take this decision in its April meeting instead of now.

RBI’s Monetary Policy Committee in a three day meeting held in Mumbai deliberated over the key monetary policy decisions under the new RBI Governor Shaktikanta Das. Apart from a Rate cut MPC has also changed its policy stance from “Calibrated tightening” to “Neutral”.

The Rate cut will be effected immediately and is a sigh of relief for those you are looking for home loans.

The MPC comprising 6 members, voted unanimously for the change in stance but only four members (including RBI Governor) voted for a cut in Repo rate, while other two including Deputy Governor Viral Acharya, voted in support of keeping a status quo.

As per RBI, the rate cute is in consonance with the MPC’s medium term objective of maintaining a stable 4% inflation rate, and supporting market growth.

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