The Reserve Bank of India (RBI) on Wednesday cut repo rate for the fourth consecutive time this calendar year to 5.40% from the current 5.75% amid low inflation, faltering economic growth and uncertain global scenario.
The six-member monetary policy committee (MPC) headed by Governor Shaktikanta Das announced the decision after a three-day meeting. On February 7, April 4 and June 6, the central bank had reduced the key lending rate by 25 basis points each time to infuse liquidity and push growth.
The GDP projection was adjusted to 6.9% for this year from the earlier projection of 7% .
Repo rate is the rate at which the RBI lends money to commercial banks. A repo rate cut allows banks to reduce interest rates for consumers on loans, and lowers equal monthly installments on home loans, car loans and personal loans.
India’s economy grew by only 6.8% in 2018-19, according to government data. In the fourth quarter (January to March), the growth dipped to 5.8%, marking a five-year low.
Retail inflation at 3.18% in June has remained below the RBI’s medium-term target of 4 per cent for almost a year.
(With ANI inputs)