Repo rate slashed by 25BPS, down from 6.75% to 6.50%


Reserve Bank of India Governor, Raghuram Rajan, has announced slashing of ‘repo rate by 0.25 %’ which is down from 6.75% to 6.50%.

The RBI has, however, kept the CRR unchanged at 4%.

Speaking to media Rajan said, ” Borrowing is now significantly cheaper and will continue to do so. Focus is now on transmission of RBI rate cuts. Monetary policy stance remains accommodative. Inflation,transmission of rates and monsoon will determine future monetary policy stance.”

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The RBI Governor said that he will release guidelines for on-tap licensing for banks.

He said, “Process of cleaning up bank balance sheets is underway, I am happy with the progress.”

Rajan’s announcement came a day after Union Finance Minister Arun Jaitley had talked about ‘more competitive interest rates.’

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Speaking at a CII event on Monday, Jaitley had said, “The government has stuck to fiscal deficit commitments and inflation has been under control. Therefore, I do hope that this movement will continue in order to make our economy more competitive with more competitive interest rates.”
The government has cut the small savings interest rate by up to 1.3 percent, facilitating an RBI rate cut.

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India’s annual retail inflation eased to 5.18 percent in February from 5.69 percent in the month before even as the 12-month wholesale inflation was in the negative for the 16th straight month, official data showed last month.


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