Breaking : RBI cuts interest rate. lowest since 2010

Reserve Bank of India cuts rate by 0.25%. That’s 5 times in a row. 

Continuing its stance on interest rates, RBI today has cut the benchmark repo rate by 0.25%. The cumulative cut this year so far is 1.35% or 135 basis points. Reserve Bank of India have also trimmed its estimate for GDP to 6.1% from 6.9%. 

The rate cut came much in line with expectations, as low inflation expectations offered policymakers room to revive a slowing economy thru rate cuts.

Repo rate is the rate at which the central bank lends money to the commercial banks.

The reverse repo rate now stands at 4.9 percent. Central bank maintained its accommodative policy stance which means it may reduce rates further if required to support economy.

All members of the MPC voted in favour of reducing the repo rate. Chetan Ghate, Pami Dua, Michael Debabrata Patra, Shri Bibhu Prasad Kanungo and Shri Shaktikanta Das voted for the 25 basis points rate cut. Ravindra H Dholakia voted for a 40 basis points rate cut.

This rate will soon reflect in your EMI. RBI have now mandated banks to linked their rates to benchmark rates and transmit any movement (reduction / increase) in 90 days from date of announcement. Previously banks used to delay this transmission. So it’s good news if you are servicing loans   

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