The MPC on Thursday cut repo rate by 25 basis points to 6.25 percent with Das, Ravindra Dholakia, Pami Dua and Michael Debabrata Patra voting in favour of the decision
In the run-up to the Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das was seen as the man who held the key to the MPC outcome, especially his views on the repo rate the central bank chooses. And Das did spring a surprise when the markets were expecting just a change in stance.
The MPC on Thursday cut repo rate by 25 basis points to 6.25 percent with Das, Ravindra Dholakia, Pami Dua and Michael Debabrata Patra voting in favour of the decision. Chetan Ghate and Viral Acharya batted for an unchanged policy rate.
"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect," said the policy statement.
This sixth bi-monthly policy is Das's first as the central bank's Governor and the first policy after Budget.
The MPC unanimously voted to change the stance to neutral from calibrated tightening set in October. The MPC reiterated its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis. The RBI had in its December 5 policy review kept both the repo rate and the stance unchanged.
The RBI in its statement said that the decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth.Since 2017, there have been only two instances, counting the latest one, when a decision on policy rate cut got a 4:2 verdict. On August 2, 2017, the then RBI Governor Urjit Patel, RBI Deputy Governor Viral Acharya and members Chetan Ghate and Pami Dua voted for a 25 bps rate cut to 6 percent. Meanwhile, Michael Patra and Ravindra Dholakia voted against a rate cut.