RBI cuts repo rate: Why central bank is in a spot

RBI cuts repo rate: Why central bank is in a spot

Shweta Punj | August 02,2017

With demonetisation and GST, this has been a difficult year for monetary policy committee.

The Reserve Bank of India (RBI) on Wednesday cut its policy repo rate by 25 basis points in its third bi-monthly monetary policy review of 2017-18. The current repo rate now stands at 6 per cent. The central bank also kept the reverse repo rate at 5.75 per cent. The rate cut, first time in 10 months, is expected to make home loans cheaper as interest rates are likely to come down. "The trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data. The MPC remains focused on its commitment to keeping headline inflation close to 4 per cent on a durable basis," RBI said in a note.

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