Mumbai: The Reserve Bank today slashed benchmark lending rate by 0.25% to 6%, citing reduction in upside risk to inflation – a move that will lower EMIs for home, auto and personal loans.
This is the first rate cut since October 2016 and the interest rate is now at a six-year low. In line with record low retail inflation, the RBI-governor-headed Monetary Policy Committee cut the policy repo rate by 25 basis points to 6% and the reverse repo by similar proportion to 5.75%.
The MPC has also decided to keep the policy stance neutral and to watch incoming data with a view to keeping headline inflation close to 4%.
It stressed on urgent need to strengthen private investments, clear infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana.
RBI said it is working in close coordination with the government to resolve large stressed corporate borrowings and recapitalize public sector banks.