The Reserve Bank of India’s Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, on Thursday unanimously lowered key lending rate or repo rate by 25 basis points or 0.2
5 per cent to 5.75 per cent, reports NDTV.
The six-member committee also changed the policy stance from “neutral” to “accommodative”. Repo rate is the interest rate at which commercial banks borrow short-term funds from the RBI. Thursday’s decision comes after conclusion of a three-day meeting of the MPC. With this cut, the RBI lowered the key interest for third time in a row to a level last seen in September 2010.
A recent poll by Reuters showed two-thirds of 66 economists expected the Monetary Policy Committee to announce a 25-basis-points cut in the repo rate to 5.75 per cent.
The rate cut comes as a relief to borrowers as equated monthly instalments (EMI) for home loans, car loans and other loans are set to come down. However, depositors would earn less on their bank investments.