RBI cuts repo rate by 25 basis points
Context:
- The Reserve Bank of India (RBI) has cut its repo rate under liquidity adjustment facility (LAF), or the rate at which it lends to banks, by 25 basis points to 6%, with immediate effect.
- This is the second consecutive rate cut from RBI under new Governor Shaktikanta Das, after a rate cut in February.
- The RBI on Thursday announced its first bi-monthly policy statement of the current financial year.
- Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.
- The six-member Monetary Policy Committee (MPC) led by RBI Governor also decided to maintain the neutral monetary policy stance.
- These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of plus or minus 2 per cent while supporting growth.