RBI cut repo rate by 25 bps to 6.25 percent, Urjit Patel’s first monetary policy review

RBI cut repo rate by 25 bps to 6.25 percent, here are new monetary policy rates CRR, MSF, Reverse Repo, Bank rate, CRR, SLR : Reserve bank of India has reduced the key policy rate or the repo rate /short term lending rate by 25 bps to 6.25 per cent from 6.50 percent earlier.

RBI cut repo rates by 25 bps in Urjit Patel's first monetary policy review
RBI cut repo rates by 25 bps in Urjit Patel’s first monetary policy review

Highlights of RBI Monetary Policy Review :

  • First rate decision exercise by Monetary Policy Committee (MPC)
  • All six members voted in favour of monetary policy decision

It was the first rate decision made by the Monetary Policy Committee (MPC) of the bank, headed by RBI Governor Urjit Patel and comprises six members.

All the six committee member’s votes were in favour of the monetary policy decision. The minutes of the MPC’s meeting will be published on October 18. 

The policy rate in India has averaged 6.70 per cent from 2000 until 2016. MPC noted that the recent sharp drop in inflation reflects a downward shift in the momentum of food inflation – which holds the key to future inflation outcomes – rather than merely the statistical effects of a favourable base effect. 

Retail inflation, which is a key factor that the central bank considers before deciding policy rates, stood at 5.05 per cent in August, the lowest in six months. 

What are new REPO Rate, Reverse Repo, CRR, SLR and MSF Rate ?

The central bank has maintained status quo on cash reserve ratio (CRR), which stands at 4 per cent while statutory liquidity ratio (SLR) remained unchanged at 20.75 per cent. The marginal Standing Facility (MSF) rate, meanwhile, has been adjusted to 6.75 per cent from 7 per cent earlier. 

REPO Rate : 6.25 (w.e.f 04/10/2016)

Repo rate decreased from existing 6.50 % continuing since 05/04/2016.

Reverse Repo Rate : 5.75% (w.e.f 04/10/2016)

Reverse Repo Rate decreased from 6.00% continuing since 05/04/2016)

Marginal Standing Facility (MSF) : 6.75 % (w.e.f 04/10/2016)

MSF decreased from 7.00% continuing since 05/04/2016.

Bank Rate : 6.75% (w.e.f 04/10/2016), decreased form existing 7.00% , continuing since 05/04/2016.

Cash Reserve Ratio (CRR) : 4.00% (w.e.f 09/02/2013), decreased from 4.25% which was continuing since 30/10/2012.

Statutory Liquidity Ration (SLR) : 20.75% (w.e.f 04/10/2016) decreased from 21.00 percent continuing since 09/07/2016.

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