The Reserve Bank of India (RBI) has again cut the repo rate to remove the slowdown in economic activity. In the RBI’s Monetary Policy Committee (MPC) meeting held today, the central bank announced a deduction of 25 basis points. With this, the new repo rate has been 5.15 percent, which was 5.40 percent earlier. Let us know that in the last meeting held in August, 35 basis points were cut. In this way, so far this year RBI has cut the repo rate by 1.35%. After this deduction, the EMI of your loan is going to be reduced now.
RBI has said that the repo rate can be further reduced. At the same time, the reverse repo rate has come down to 4.9 percent. The bank rate has been kept at 5.40 percent. The central bank has lowered its GDP growth estimates from 6.9 per cent to 6.1 per cent in the current financial year. According to the MPC, the negative output gap has increased.
Significantly, the country’s growth rate reached 5 percent in the quarter ended in June. This is the lowest level of the last 6 years. RBI has also lowered the forecast of the country’s growth rate from 7 percent to 6.9 percent. Recently, Finance Minister Nirmala Sitharaman made several big announcements to speed up the economy. Among them, the announcement of banks merger, corporate tax cuts, new regulations on FDI and housing sector were prominent.
It is known that RBI has asked banks to link loans to repo rate. Because, till now the banks have got the benefit of 1.10 percent from the Reserve Bank, but the banks are not giving its full benefit to the customers. Meaning, banks are getting cheap loans, but people have not got many benefits from it.
However, many economists are not in favor of a rate cut. He believes that the central bank will keep some things in reserve and take a decision only after looking at the pace of inflation.