RBI cuts key rate by 25 bps to boost economic activitiy

Mumbai: Amid softening inflation, Reserve Bank of India cut key lending rates by another 25 basis points to 6.00 per cent on Thursday to boost economic activity.

In the first bi-monthly monetary policy of 2019-20 under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.

The Monetary Policy Committee (MPC) also decided to maintain the neutral monetary policy stance.

Benchmark interest rate was cut by 0.25 per cent to 6.00 per cent from 6.25 per cent, a move that would result in lower cost of borrowing for the banks that are expected to pass on the benefits to individuals and corporates.

Accordingly, the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.

RBI also reduced retail inflation estimate to 2.4 per cent.

RBI Governor Shaktikanta Das said export growth remained weak in January and February 2019. While imports, especially non-oil gold imports, declined.

GDP projection for 2019-20 is kept at 7.2 per cent, with 6.8 to 7.1 per cent for the first half of 2019-20 and 7.3 to 7.4 per cent for the second half, he added.

(With agency inputs)