RBI Monetary Policy August 2019: RBI Repo rate cuts lending rate by 35 basis points, revises GDP forecast to 6.9%https://indianexpress.com/article/business/rbi-cuts-lending-rate-repo-rate-by-35-basis-points-5884939/

RBI Monetary Policy August 2019: RBI Repo rate cuts lending rate by 35 basis points, revises GDP forecast to 6.9%

RBI Monetary Policy 2019 Repo Rate: The RBI noted that global economic activity has slowed down since the previous monetary policy meeting in June owing to trade tensions among leading economies.

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The RBI noted that global economic activity has slowed down since the previous monetary policy meeting in June owing to trade tensions among leading economies.

The Reserve Bank of India on Wednesday cut the key interest rate for the fourth consecutive time, reducing the policy repo rate by 35 basis points from 5.75 per cent to 5.40 per cent. In the earlier three policies, it has reduced repo rate by 25 basis points each.

RBI Governor Shaktikanta Das said the financial markets have fully absorbed the past three rate cuts. Going forward, he said, banks should further lower their rates. Governor Das also expressed confidence in the government to take further measures to revive growth. RBI confident of credit demand picking up and growth reviving, he said.

Explained: Why has RBI cut lending rate by 35 bps?

Shortly after the monetary policy announcement, the State Bank of India followed it up with a rate cut of 15 basis point. The bank said the lending rates will be effective from August 10.

According to its third bi-monthly monetary policy statement, the RBI also revised the reverse repo rate to 5.15 per cent. It also trimmed the GDP growth forecast for the current fiscal to 6.9 from 7 per cent. On the inflation front, the RBI said it remained within the targeted band. The CPI retail inflation is projected at 3.1 per cent for Q2 FY20 and 3.5-3.7 per cent for Q2 FY20. In its last policy review in June, the apex bank had projected retail inflation at 3.4-3.7 per cent for the second half of this fiscal.

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The central bank noted that global economic activity has slowed down since the previous monetary policy meeting in June, owing to trade tensions among leading economies. It also noted that economic activity remained weakened in major emerging market economies. China, Russia and Brazil, among others, saw subdued activity, the RBI said.