The Reserve Bank has cut repo rate by 35 basis points to 5.40 per cent to give a fillip to the economy. Repo rate is the rate at which RBI lends to banks. This is the fourth consecutive time that the RBI’s Monetary Policy Committee reduced the rate.
On earlier three occasions, RBI had reduced repo rate by 25 basis points each. Addressing a press conference in Mumbai, RBI Governor Shaktikanta Das said the central bank will not hesitate to cut the rate further in future if required.
In its third bi-monthly policy announced today, RBI has decided to maintain the accommodative stance of monetary policy.
The Monetary Policy Committee has noted that domestic economic activity continues to be weak, with the global slowdown and escalating trade tensions posing downside risks.
RBI said an uptick in food inflation cannot be ruled out due to uneven distribution of monsoon, adding that volatile crude prices also have some impact on fuel prices.
Hence, RBI has projected CPI inflation at 3.1 per cent for the second quarter of 2019-20 and in the range of 3.5 to 3.7 per cent for the second half of 2019-20 with risks evenly balanced.