RBI reduces the key lending rate by 25 bps

The central bank has maintained a ‘Neutral’ stance on the monetary policy.

A view of Reserve Bank of India in New Delhi

The Reserve Bank of India on Thursday once again reduced the benchmark lending rate by 0.25 percentage points to 6 per cent.

Four members of the monetary policy committee (MPC) voted in favour of the rate cut, while Deputy Governor Viral Acharya and Chetan Ghate voted for maintaining the status quo.

The central bank has maintained a ‘Neutral’ stance on the monetary policy.

The MPC noted that the output gap remained negative and the domestic economy was facing headwinds, especially on the global front.

“There is a need to strengthen domestic growth impulses by spurring private investment which remained sluggish,” the RBI said.

While projecting the gross domestic product (GDP) growth for 2019-20 at 7.2 per cent, the RBI revised downward retail inflation estimate to 2.4 per cent in Q4 FY-19.

Highlights

* Short-term lending rate (repo) reduced by 25 basis points to 6 per cent

* This is a second back-to-back rate cut

* RBI maintains Neutral stance on the monetary policy

* Four out of six MPC members voted in favour of a rate cut

* GDP growth projection lowered to 7.2 per cent for 2019-20

* RBI revises downward retail inflation estimate to 2.4 per cent in Q4 FY19.

* MPC notes output gap remains negative and domestic economy facing headwinds

* Next monetary policy statement on June 6.

 

(This story originally appeared on The Hindu)



Categories: Finance and Banking

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