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Repo rate cut: RBI MPC trims benchmark lending rate further by 40 bps to 4%

Das said the decision was taken at an off-cycle meeting of the monetary policy committee held over the past three days.

May 22, 2020 / 02:24 PM IST

RBI Governor Shaktikanta Das on May 22 announced 40 basis points cut in repo rate to 4 percent. Accordingly, the reverse repo rate stands adjusted to 3.35 percent.

Repo is the rate at which RBI lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation.

"The monetary policy committee (MPC) has voted 5:1 to reduce policy repo rate by 40 basis points," Das said while addressing his third press conference to announce COVID-19-related relief measures.

The MPC maintained its accommodative stance.

Das said the decision was taken at an off-cycle meeting of the monetary policy committee that was done over the past three days.

MPC assessed that inflation outlook is highly uncertain, Das said. 


Food inflation which had eased from January 2020 peak in February and March has now surged to 8.6 percent in April. The price of vegetables, oilseeds, and milk has emerged as pressure points, he said.

GDP growth in FY2020-21, Das said, is expected to remain in the negative category, with some pick up in the second half.

"There will be a gradual revival of activity and demand by the second half of FY21. MPC (monetary policy committee ) believes it is essential to instil confidence at this point of time," Das told media.

In the wake of the coronavirus pandemic, the RBI MPC on March 27 had cut the repo rate by a massive 75 basis points to 4.40 percent from 5.15 percent.

The MPC had then voted with a 4:2 majority to reduce the policy repo rate.

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