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    RBI Monetary Policy: MPC cuts repo rate by 35 basis points; fourth in a row

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    RBI Monetary Policy: MPC cuts repo rate by 35 basis points; fourth in a row

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    In February 2019, the MPC cut interest rates by 25 basis points and changed stance to 'neutral' from 'calibrated tightening'. The stance remained unchanged in April policy, but in June, the committee changed stance to 'accommodative' from 'neutral' while revising the country's GDP growth rate to 7 percent from 7.2 percent.

    The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) cut its key interest rate for the fourth successive time, reducing the repo rate by 35 basis points to 5.4 percent, to get the economy off its sickbed.
    The MPC also slashed the GDP growth forecast for the current fiscal year to 6.9 percent from 7 percent in the bimonthly review of the economy on Wednesday.
    The MPC has maintained an 'accommodative' stance for the monetary policy, implying that an increase in interest rates is off the table.
    The benchmark interest rate is what the Reserve Bank of India charges on lending to commercial banks. The economy is suffering from tepid consumer spending and corporate investment and production of capital goods and consumer durables under strain.
    Wednesday's cut is RBI governor Shaktikanta Das' fourth straight rate reduction since he took office in December 2018. The MPC has changed its stance twice in the past four policies.
    One basis point is a hundredth of a percentage point.
    Four members (Ravindra H. Dholakia, Michael Debabrata Patra, Bibhu Prasad Kanungo and Shaktikanta Das) voted to reduce the policy repo rate by 35 basis points, while two members (Chetan Ghate and Pami Dua) voted to reduce the policy repo rate by 25 basis points, RBI said.
    In February 2019, the MPC cut interest rates by 25 basis points and changed stance to 'neutral' from 'calibrated tightening'. The stance remained unchanged in April policy, but in June, the committee changed stance to 'accommodative' from 'neutral' while revising the country's GDP growth rate to 7 percent from 7.2 percent.
    Ten economists polled by CNBC-TV18 expected the MPC to bring down repo rate, which is the rate at which RBI lends to banks, to 5.50 percent from 5.75 percent.
    Lower interest rates help make credit cheaper for borrowers, though they can also spur inflation.
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