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RBI Monetary Policy: India's benchmark interest rate now lowest since 2010

In its fourth bi-monthly meeting for 2019-20 on October 4, the Reserve Bank of India's Monetary Policy Committee (MPC) slashed the repo rate by another 25 bps.

October 04, 2019 / 04:55 PM IST

After the 25 basis point reduction that took place October 4, the country's external benchmark rate is at its lowest since 2010

This is the fifth consecutive policy rate reduction by the central bank, bringing the repo rate down to the current 5.15 percent.

The move came amid a slowing domestic economy, which is a currently at a six-year low of 5 percent. The aim is to boost growth and demand, especially with the RBI being in a comfortable position with respect to inflation in the economy.

Historical data sheds light on the trends in repo rate adjustments by the RBI vis-a-vis the economic situation prevailing in the country at that point of time.

Graph 1


When looking at data from the year 2000 onwards, one can see the fluctuations in policy rates. Ending 2000, the policy rates were slashed by the central bank steadily over the next three to four years.

Thereafter, beginning 2005 and right up until late 2008, it kept on increasing the repo rate.

Similarly the period starting 2014 saw a phase where the RBI slashed policy rates gradually till around early last year.
Moneycontrol News
first published: Oct 4, 2019 04:55 pm

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