The Reserve bank of India in its bi-monthly monetary policy review today reduced the repo rate by 25 basis points to 5.75 per cent from 6.0 per cent with immediate effect.
Consequently, the reverse repo rate stands adjusted to 5.50 per cent, and the marginal standing facility rate and the Bank Rate to 6.0 per cent. The six-member Monetary Policy Committee headed by RBI Governor Shaktikanta Das also unanimously decided to change the stance of monetary policy from neutral to accommodative.
Taking into account weak global demand due to the escalation in trade wars and weakened private consumption in rural areas, Mr. Das informed that the RBI has lowered the GDP growth forecast for 2019-20 to 7 percent from 7.2 percent.
The RBI Governor said that the retail inflation forecast has also been raised taking into consideration factors like crude prices and expectations of a normal monsoon in 2019.
As per the Monetary Policy statement, India’s foreign exchange reserves were at 421.9 billion US dollars as on 31 May, 2019.The next meeting of the MPC is scheduled during August 5 to 7.