RBI Cuts Repo Rate by 25 Basis Pts to 6%, Projects 7.2% GDP Growth
The central bank has maintained a neutral stance on the monetary policy.
The Reserve Bank of India on Thursday, 4 April, cut benchmark interest rate by 0.25 percent for the second time in a row to bring the interest rate to 6 percent – the lowest level in one year on softening inflation.
The central bank has maintained a neutral stance on the monetary policy and projected GDP growth for 2019-20 at 7.2 percent. The earlier growth projection was of 7.4 percent.
The Sensex ended 192.40 points lower, while Nifty was down 46 points at 11, 598 on Thursday, after RBI announced the repo rate cut by 25 basis points to 6 percent, with the reverse repo rate falling to 5.75 percent.
- The RBI’s policy decision comes in the context of lower inflationary trends
- In the second policy review under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut
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Sensex, Nifty Slip a Day Before RBI's Monetary Policy Decision
The 30-share BSE Sensex settled 179.53 points, or 0.46 percent lower at 38,877.12 on Wednesday after a forecast of below-normal monsoon this year.
The gauge had closed above the 39,000-mark for the first time ever on Tuesday.
The broader NSE Nifty too pared early gains and ended 69.25 points, or 0.59 percent, down at 11,643.95 on Wednesday.
The Skymet forecast of below-normal monsoon “comes just a day before RBI is expected to cut rates by 25 bps and adopt a pro-growth stance. However, expectation of poor rainfall and already slow economic growth alongside subdued inflation may pressurise RBI to go for a higher rate cut, thus surprising the street positively," Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management, was quoted as saying by PTI on Wednesday.
Rupee Opens Lower Ahead of RBI Policy Decision
The Indian rupee opened lower against the US dollar ahead of the RBI policy decision, with the home currency depreciating as much as 0.22 percent to 68.57 against the greenback, reported BloombergQuint.
RBI Cuts Repo Rate by 25 Basis Points, Projects GDP Growth at 7.2%
The RBI has cut the repo rate by 25 basis points to 6 percent, with the reverse repo rate falling to 5.75 percent.
The rate cut will result in lower cost of borrowing for the banks that are expected to transmit the same to individuals and corporates.
In the second policy review under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.
The central bank has maintained a neutral stance on the monetary policy and projected GDP growth for 2019-20 at 7.2 percent.
The RBI had last cut interest rate on 7 February to 6.25 percent from 6.5 percent.
The last time the repo rate stood at 6 percent was in April 2018.
The rate cut is in consonance of achieving the medium-term objective of maintaining inflation at the 4 percent level while supporting growth, RBI said in a statement.
RBI on Retail Inflation Estimate
The RBI revised downward retail inflation estimate to 2.4 percent in Q4 of FY19, 2.9-3 percent in first half of FY20 and 3.5-3.8 percent in second half of FY20.
Sensex Down 192 Pts, Nifty Below 11,600 After RBI’s Rate Cut
The Sensex ended 192.40 points lower on Thursday, 4 April, after RBI announced a repo rate cut by 25 basis points to 6 percent.
Nifty was down 46 points at 11, 598.