RBI cuts interest rate by 25 bps, revises GDP growth to 7%
The decision to reduce the interest rate was unanimous.
The six-member Monetary Policy Committee (MPC) of the
Reserve Bank of India reduced the repo rate for third straight policy meeting by
25 basis points to 5.75% to address growth concerns. The stance of the policy
has also been changed from neutral to accommodative. The decision to reduce the
interest rate was unanimous.
“The MPC notes that growth impulses have weakened
significantly as reflected in a further widening of the output gap compared to
the April 2019 policy,” the RBI said.
The RBI has revised GDP growth projection for the
current financial year from 7.2% to 7%. “The path of CPI inflation is revised
to 3.0-3.1% for H1:2019-20 and to 3.4-3.7 % for H2:2019-20, with risks broadly
balanced,” the RBI said.
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