After RBI cut its repo rate in its latest bi-monthly policy, Finance Minister Piyush Goyal said that the move will give a boost to the economy by providing affordable credit to small businesses and homebuyers. The Reserve Bank of India (RBI) on Thursday cut repo rate by 25 bps to 6.25% in its sixth bi-monthly monetary policy statement for 2018-19. The Monetary Policy Committee (MPC) has also unanimously voted to change the policy stance to ‘neutral.’
“RBI’s decision to reduce the repo rate by 25 basis point from 6.5 per cent to 6.25 per cent and change of stance to ‘Neutral’ will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc and further boost employment opportunities,” Finance Minister Piyush Goyal said in a tweet.
“Assessment of growth and inflation is quite realistic and underlines low inflation and high growth path for India for 2019-20. Welcome change of stance to neutral and rate cut by 25 bps. Also welcome removal of FPI restriction,” Economic Affairs Secretary Subhash Chandra Garg tweeted.
The reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.5 per cent. The MPC also decided to change the monetary policy stance from calibrated tightening to neutral. Monetary policy committee voteed 4:2 in favour of rate cut and was unanimous on change in stance. The RBI also revised down headline inflation estimates to 2.8 per cent in March quarter, 3.2-3.4 per cent in first half of next fiscal and 3.9 per cent in Q3 of FY20. In its last bi-monthly monetary policy, the bank had kept the repo rate unchanged at 6.5 percent and the reverse repo rate at 6.25 percent.