RBI cuts repo rate by 25 bps to 6%

RBI cuts repo rate by 25 bps to 6%
03/08/2017 , by , in News/Views

In the lines of market expectations, the Monetary Policy Committee (MPC) of the reserve Bank of India decided to cut the repo rate by 25 basis points to 6 per cent. The decision was taken in its third bi-monthly policy review. The central bank had last cut the policy rate in October 2016.

Four of six MPC members, Dr. Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel were in favour of the monetary policy decision, while Dr. Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and Dr. Michael Debabrata Patra voted for status quo.

MPC decided to keep the policy stance neutral and to watch incoming data. The reverse repo rate has been adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the bank rate to 6.25 per cent.

The projection of real GVA growth for 2017-18 has been retained at the June projection of 7.3 per cent, with risks evenly balanced.

CPI inflation stood at 1.54 per cent in June, lower than the central bank’s target range of 2-3.5 per cent during the first half of the financial year.

The market players across the sectors welcomed the decision.

Mr. Ravish Kapoor, Director, Elan Group said “We appreciate the decision for reduction in the repo rate as this would boost the liquidity in the system. Easing interest rate will help revive Real-Estate sector which is profoundly sensitive to interest rate movement.”

“RBI’s decision to reduce the repo rate will surely improve the economy. The lowering of the Repo rate will spur growth of the real estate sector with sentiments of buyers turning favourable. This will ensure uplifted property demand in near future and also boost the affordable housing segment” commented Mr. Sumit Berry, Managing Director, BDI Group

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