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.