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Business Headlines : Interest Rates Cut – RBI’s Monetary Policy Decoded

The RBI’s first bi-monthly monetary policy was announced for the year today. The monetary policy committee (MPC) decided to cut interest rates or repo rate by 25 basis points to 6%. The reverse repo rate was cut by 25 basis points as well to 5.75%. The policy stance was maintained at neutral with a 5 : 1 vote in favour of maintaining the same. GDP growth forecast and inflation forecast going forward (which are the two most important parameters) were revised downward and this was the reason seen for the rate cut. We take a look at the highlights of the MPC meet and the reasons and risks sighted by the 6 member strong team for their decision to cut repo and reverse repo rates and to keep the stance at neutral.

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