The Reserve Bank of India (RBI) on Thursday lowered repo rate by 25 basis points (bps) to 5.75 per cent, for third time in a row. Subsequently, the reverse repo rate under the LAF stands adjusted to 5.50 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.0 per cent.
Repo rate is the interest rate at which commercial banks borrow short-term funds from the RBI.
RBI has also changed policy stance to accommodative from neutral.
Today’s decision came after the conclusion of a three-day meeting of the Monetary Policy Committee (MPC) led by Governor Shaktikanta Das.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
The move came two weeks after the Lok Sabha elections which saw Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) returned to power.