RBI cuts repo rate by 25 bps in fourth bi-monthly policy

This was Urjit Patel’s maiden policy announcement as RBI Governor. This was the central bank's fourth bi-monthly policy statement for the year 2016-17.

By: Express Web Desk | New Delhi | Updated: October 4, 2016 4:16 pm
RBI, RBI rate cut, RBI repo rate, rbi policy review, rbi policy, urjit patel, rbi repo rate, rbi rate cut, RBI Governor Urjit Patel. (Express Photo/Ganesh Shirsekar)

The Reserve Bank of India (RBI) on Tuesday cut repo rate by 25 bps to 6.25 per cent. Reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent. All six members of the monetary policy committee voted in favour of cutting repo rate.

In its policy statement, the central back said that the decision of the monetary policy committee was consistent with the accommodative stance of the monetary policy. Retail inflation is expected to be 5 per cent by March 2017 with upside risk.

WATCH VIDEO: Reserve Bank Of India Cuts Repo Rate By 25 bps To 6.25%

Tuesday’s policy review was Urjit Patel’s maiden announcement as RBI Governor. This was the central bank’s fourth bi-monthly policy statement for the year 2016-17.

Also Read: RBI repo rate cut by 25 bps: Your loans will now get cheaper

The policy was announced in the afternoon against the existing practice of 11 am.

Earlier, former RBI Governor Raghuram Rajan had the final say on interest rate cut decisions. Patel now has to go by the advice of a newly set up six-member monetary policy committee (MPC). This is for the first time that decision-making on interest rates has shifted to the six-member panel which has equal representation from RBI and the government.

Watch what else is making news

Since January last year, the RBI has cut the repo-rate – the rate at which RBI lends to banks – five times. India’s retail inflation has touched a five-month low of 5.05 percent in August, triggering hopes of a rate cut. The RBI and the government have set a retail inflation target of four percent for the next five years with an upper tolerance level of six percent and lower limit of two percent. Mounting bad loans will remain another focus area of Patel’s debut policy review.

Rajan has set a deadline of March 2017 for banks to clean up their balance sheets. Patel has to ensure that there is no let-up on this cut-off date.

With ANI inputs

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  1. S
    San
    Oct 4, 2016 at 1:05 pm
    Goal of firing RR achieved. India skrewed!
    Reply
    1. P
      PCKULKARNI
      Oct 4, 2016 at 10:03 am
      Now we know why RR was kicked out. Ambanis and Adanis will be laughing all the way
      Reply
      1. A
        Amit
        Oct 4, 2016 at 9:31 am
        Thumbs up. Modi ji selected right man
        Reply
        1. A
          Amit
          Oct 4, 2016 at 12:26 pm
          Modi modi modi Modi
          Reply
          1. B
            Bijan Mohanty
            Oct 4, 2016 at 2:28 pm
            Since half of the Monetary Policy Committee members are appointed by Govt., RBI's Monetary Policy will now be under control of Center by default and RBI's independence is snatched away. Not a good omen for economy.
            Reply
            1. R
              Rahul
              Oct 4, 2016 at 9:54 am
              You dumb bhakt, we are in low-growth and high-inflation environment. That is why Rajan's policy was so successful in containing inflation and also allowing enough room to grow. Now this "ony-for-industrialists-and-builders" policy is going to grind the middle and lower cl people.
              Reply
              1. H
                Hardeep
                Oct 4, 2016 at 9:03 pm
                Still poor people can't afford home in India .. stupid country to live in ...
                Reply
                1. L
                  l s
                  Oct 4, 2016 at 10:00 am
                  All members are chamchas of F M Jaitley. All have fallen in line to his wishes.lt;br/gt;lt;br/gt;Have loan lending rates come down ????? No.lt;br/gt;Have interest rates on fixed deposits come down ????? Yes.lt;br/gt;lt;br/gt;So, the common man and the senior citizens who depend on interest suffer, while the bussiness cl get loans a bit cheaper. Anti poor intent of the govt.
                  Reply
                  1. M
                    Manzoor
                    Oct 4, 2016 at 9:42 am
                    Bad days started for monetary policy. RBI reduced the repo rate by 0.25% on the umption that by March'2017 inflation will be 5%. Now everyone (govt/industry) will be happy except economist.
                    Reply
                    1. M
                      Manzoor
                      Oct 4, 2016 at 9:42 am
                      Bad days started for monetary policy. RBI reduced the repo rate by 0.25% on the umption that by March'2017 inflation will be 5%. Now everyone (govt/industry) will be happy except economist.
                      Reply
                      1. R
                        RAJAN
                        Oct 4, 2016 at 11:30 am
                        A representative panel has been formed to overrule the discretion of RBI Governor. Pro Corporate Governance...Let see whatever it would be, it should not affect the common people...
                        Reply
                        1. V
                          Vihari Naidu
                          Oct 4, 2016 at 10:38 am
                          Raghuram Rajan stood for the common man and thought about inflation over and above corporate interests. Look what's happening now....?! Suit, Boot Sarkar
                          Reply
                          1. V
                            Vihari Naidu
                            Oct 4, 2016 at 10:40 am
                            Still the prices of pulses and vegetables are pretty high and now this....
                            Reply
                            1. V
                              Vihari Naidu
                              Oct 4, 2016 at 10:39 am
                              Thumbs up to crony capitalism.....
                              Reply
                              1. D
                                Dr. Nath
                                Oct 4, 2016 at 10:41 am
                                This proved R3 was not genius but obsessed with infation and not indespensible.The rate cut was overdue.
                                Reply
                                1. S
                                  siriyaar
                                  Oct 4, 2016 at 9:44 am
                                  Good decision bring down intrest rate will bring many people to work. Now many people deposit money and enjoy life. Intrest on deposit as low as possoble similar to business. But must collect all loan in time.
                                  Reply
                                  1. M
                                    Mohan Krishnaswamy
                                    Oct 4, 2016 at 3:38 pm
                                    my comment is not offensive .why is it held up?
                                    Reply
                                    1. M
                                      Mohan Krishnaswamy
                                      Oct 4, 2016 at 3:33 pm
                                      why my comment is held up?
                                      Reply
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