Mumbai, Oct 4: In line with expectation, the Reserve Bank of India (RBI) on Friday cut the Repo rate by 25 basis points (bps) to 5.15 per cent.
Consequently, the reverse repo rate now stands at 4.9 per cent. This was fifth time in a row the RBI slashed the repo rate. Repo rate is the rate at which the central bank lends money to the commercial banks, in case of any shortfall in funds.
All members of the MPC votes in favour of reducing all repo rate. Chetan Ghate, Pami Dua, Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das voted for the 25 basis points rate cut. Ravindra H Dholakia voted for a 40 basis points rate cut.
"Export prospects have been impacted by slowing global growth and continuing trade tensions. On the positive side, however, the impact of monetary policy easing since February 2019 is gradually expected to feed into the real economy and boost demand. Several measures announced by the Government over the last two months are expected to revive sentiment and spur domestic demand, especially private consumption," RBI said.
Governor Shaktikanta Das said the MPC is seeking intensified measures to arrest slowdown. "RBI has no reason to doubt the government commitment to meet fiscal deficit target. Government has ways and means to adhere to it and past records give no reason to doubt it, " Das said, adding that he is not aware of any demand by the government for an interim dividend of Rs. 30,000 crore.
"As long as the growth momentum remains as it is and till growth revives, RBI will maintain accommodative stance," he said.UNI