The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das on Thursday announced reduction of repo rates by 25 basis points to 5.75 percent in its second bi-monthly monetary policy of 2019-20 on Thursday.
The move is expected to lead to reduction of lending rate by banks leading to lower EMI for housing, car loan and corporate borrowers.
The repo rate under the liquidity adjustment facility (LAF) has been reduced by 0.25 percent or 25 basis points to 5.75 percent from 6 percent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.50 percent, and the CRR rates remain at 4 percent, RBI said.
The RBI MPC’s three-day meeting started on Monday. Maintaining an accomodative stance on the monetary policy, all the 6 members of the MPC voted in favour of the rate cut. Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Chetan Ghate and Dr. Viral V. Acharya and Shaktikanta Das voted in favour of the decision to reduce the policy repo rate by 25 basis points.
The RBI under its new Governor Shaktikanta Das has cut its key rates by a cumulative 0.50 percent since he took charge. The central bank has slashed the short-term lending rate (repo rate) by 25 basis points (0.25 percentage points) each in its last two policy reviews.