RBI cuts repo rate by 25 bps to nearly six-year low

Mumbai, Oct 4 (KNN) With all eyes set on RBI’s new Governor Urjit Patel to announce the decision made the Monetary Policy Committee, the apex bank in its monetary policy review today cut its key lending rate or repo rate by 25 basis points to nearly six-year low of 6.25 per cent, from 6.5 per cent.

In the Fourth Bi-monthly Monetary Policy Statement, 2016-17,  the Reserve Bank of India (RBI) cut repo rate by 25 bps to 6.25 per cent. 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 6.75 per cent. All six members of the monetary policy committee voted in favour of cutting repo rate.

Banks are likely to pass on the RBI rate cut to customers which would pull down the EMIs.

The policy decision was made by a committee for the first time. Earlier, decisions were taken solely by the RBI governor.

It was also the first policy review under Governor Urjit Patel who last month replaced Raghuram Rajan.

In its policy statement, the central bank said that the decision of the monetary policy committee was consistent with the accommodative stance of the monetary policy. Retail inflation is expected to be 5 per cent by March 2017 with upside risk. (KNN Bureau)