Here are the key takeaways from the RBI credit policy announced on June 6.
The Monetary Policy Committee has cut the repo rate by 25 bps to 5.75 percent. One basis point is a hundredth of a percentage point. The repo rate is the rate at which banks borrow from the central bank.
Here are the key takeaways from the policy meet:
- The MPC unanimously votes 6-0 for a rate cut, the second since its inception in October 2016
- The RBI has changed its policy stance to accommodative from neutral. This means it sees scope to accommodate growth concerns by supporting efforts to boost demand and reinvigorate private investment
- The RBI cuts its FY20 GDP growth forecast to 7 percent from 7.2 percent
- April to September FY20 GDP growth forecast cut to 6.4-6.7 percent from 6.8-7.1 percent
- September 2019 to March 2020 GDP growth forecast revised to 7.2-7.5 percent from 7.3-7.4 percent
- The central bank has raised its H1 FY20 consumer inflation estimate to 3-3.1 percent from 2.9-3 percent
- To issue draft for “on-tap” licensing of small finance banks by August-end
- To issue instructions on banks' leverage ratio before June 30
- Group on liquidity management framework expected to submit report by mid-July
- High-frequency indicators show service sector activity moderation
- To scrap RBI transaction charge for RTGS, NEFT systems
- To form committee to study ATM charges, fees
- Repo rate slips to the lowest level since July 2010
- Inflation expectations of households unchanged for one-year horizon
- Risks to inflation outlook remain broadly balanced- Headline inflation remains below target after pass-through of two rate cutsThe Great Diwali Discount!
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