RBI cuts key interest rate by 0.25 pc to 6%

Mumbai | The Reserve Bank of India on Thursday cut benchmark interest rate by 0.25 per cent for the second time in a row to bring interest rate to the lowest level in one year on softening inflation.

The central bank, however, kept monetary policy stance at ‘neutral’.

In the second policy review under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.

The benchmark interest rate was cut by 0.25 per cent to 6 per cent, a move that will result in lower cost of borrowing for the banks that are expected to transmit the same to individuals and corporates.

The RBI had on February 7 had last cut interest rate to 6.25 per cent from 6.5 per cent.

Last time repo rate stood at 6 per cent was in April 2018.

The rate cut is in consonance of achieving the medium term objective of maintaining inflation at the 4 per cent level while supporting growth, RBI said in a statement.

Following are the highlights of the first bi-monthly monetary policy announced by the RBI on Thursday:

* Short-term lending rate (repo) reduced by 25 bps to 6 pc;

* This is second back-to-back rate cut;

* RBI maintains Neutral stance on the monetary policy;

* Four out of six MPC members voted in favour of rate cut;

* GDP growth projection lowered to 7.2 pc for 2019-20;

* RBI revises downward retail inflation estimate to 2.4 pc in Q4 FY19.

* MPC notes output gap remains negative and domestic economy facing headwinds;

* Next monetary policy statement on June 6.

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