RBI Monetary Policy 2019 Highlights : Cuts Repo Rate by 25 basis points to 6%

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In the second bi-monthly policy review under the new Governor Shakti Kanta Das, the 6 member Monetary Policy Committee of the Reserve Bank of India (RBI) has cut the Repo rate under liquidity adjustment facility (LAF) (the rate at which it lends to banks) by 25 basis points to 6%, with immediate effect.  This is the second consecutive rate cut from RBI, after a rate cut in February.  This is RBI's 1st bi-monthly policy statement of the current financial year.

With this new cut, the Reverse Repo Rate under the LAF stands adjusted to 5.75 per cent, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 6.25 per cent. The six-member Monetary Policy Committee (MPC) led by RBI Governor also decided to maintain the neutral monetary policy stance. Here are the major highlights of RBI's monetary policy statement 2019

• RBI cut the repo rate by 25 basis points to 6 percent. 
• Last time repo rate stood at 6 per cent was in April 2018. 
• Consequently, the Reverse Repo Rate adjusted to 5.75 percent, and the Marginal Standing Facility (MSF) rate and the Bank Rate to 6.25 percent.
• Revised CPI inflation forecast downwards to 2.4 percent in Q4 of FY19, 2.9 percent-3.0 percent in H1 of FY20 and 3.5 percent-3.8 percent in H2:2019 20.
• Lowered the GDP growth forecast for FY19 to 7.2 percent from earlier 7.4 percent. GDP growth for 1H of FY20 in the range of 6.8-7.1 percent and 7.3-7.4 percent in 2H.
• The MPC also decided to maintain the neutral monetary policy stance.
• Allowed additional 2% of SLR to be recognised in liquidity coverage ratio
• MPC voted 4:2 in favour of a rate cut; 5:1 in favour of maintaining stance at neutral
• The minutes of the MPC’s meeting will be published on April 18.
• The next meeting of the MPC will be held during June 3, 4 and 6.

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