In a bid to boost the sluggish economy before elections, the Reserve Bank of India (RBI) on Thursday cut interest rate by 25 basis points for the second time in as many months, a move that may translate into lower EMIs for home and other loans.
The six-member Monetary Policy Committee (MPC), headed by the RBI governor Shaktikanta Das, cut the repo rate to a one-year low of 6 percent and reverse repo rate to 5.75 percent on prospects of benign inflation.
While four of the six members voted in favour of the rate cut, two of them were in favour of the status quo. RBI deputy governor Viral Acharya and MPC member Chetan Ghate voted for a status quo in rates.
Five of six members voted to keep the stance unchanged at Neutral, while committee member Ravindra Dholakia voted to change the stance to accommodative.
The apex bank cut the benchmark interest rate by 0.25 percent to 6 percent. This is also the first back-to-back rate cut since the MPC was formed in late 2016.
The RBI in the monetary policy statement said the domestic economy is facing headwinds, especially on the global front, as it lowered its economic growth forecast for 2019-20 to 7.2 percent from 7.4 percent estimated in February.
All markets, stocks, bonds and rupee fell after the policy announcement. What are their worries? A high powered panel of bankers and economists spoke about the immediate and medium-term ramifications.(With inputs from PTI)